Preamble

The House met at half-past Two o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

PRIVATE BUSINESS

ACCOMMODATION LEVEL CROSSINGS BILL [Lords] (By Order)

QUEEN MARY AND WESTFIELD COLLEGE BILL (By Order)

Orders for Third Reading read.

To be read the Third time on Thursday 22 June.

CITY OF WESTMINSTER BILL [Lords] (By Order)

LONDON LOCAL AUTHORITIES (No. 2) BILL [Lords] (By Order)

Orders for consideration read.

To be considered on Thursday 22 June.

Oral Answers to Questions — TREASURY

Small Business

Mr. Jenkin: To ask the Chancellor of the Exchequer what progress has been made with measures to help small business announced in his 1993 and 1994 Budgets. [27001]

The Chief Secretary to the Treasury (Mr. Jonathan Aitken): My right hon. and learned Friend's Budget measures to help small firms are making good progress, particularly in regard to the enterprise investment scheme and venture capital trusts.

Mr. Jenkin: When Ministers consult small businesses with regard to the next Budget, will my right hon. Friend take on board the views of the vast majority of small businesses, which have no interest in a single European currency? Could that be because they experience the reality of doing business as small firms, and know that we export less than 8 per cent. of our gross domestic product in goods and services to the hard-core countries of the European Union which are likely to participate in a single currency? Will my right hon. Friend assure me that those firms will not be treated as right-wing xenophobes?

Mr. Aitken: Like my hon. Friend, I have noted the views of the Federation of Small Businesses, which makes a great contribution to our domestic economy and our performance as not just a European but a world trading nation.
I hope that the federation will take some comfort from what my right hon. Friend the Prime Minister said about the single currency on 8 June, namely that

the circumstances may not ever be right".—[Official Report, 8 June 1995; Vol. 261, c. 316.]
Encouraging signals have also come from President Chirac's Government. All those signs suggest that the prospects of economic and monetary union are receding into more distant and uncertain horizons; but when any decision is made, it will be made on the basis of what is in Britain's best national interests and in accordance with our constitutional arrangements.

Mr. Skinner: Is the Chief Secretary aware that very few people will take any notice of his answers about anything? When he went to a board meeting of BMARC—a small business—he sat there not even knowing what was being done. He was paid £10,000 a year for not asking questions; two of his mates got done £2,000 for asking questions. What kind of a show does the right hon. Gentleman think he is running?

Mr. Aitken: I might as well retort that nowadays the hon. Gentleman does not seem to know what his own Front Benchers are doing. I am, however, glad to have a chance to repeat to the House that I stand by my statement on 30 March that I was given not the slightest indication or information, as a non-executive director, that any of the contracts that were going to Singapore would in any way be for onward shipment to Iran or anywhere else. I welcome the new inquiries that are taking place, and I am certain that at the end of the day they will clear my name completely.

Mr. Congdon: Does my right hon. Friend agree that small businesses will provide an increasing number of jobs over the next decade and beyond? Is it not vital, therefore, to ensure that we continue to have low interest rates and low inflation to provide the right economic framework to enable those businesses to prosper?

Mr. Aitken: My hon. Friend is right: small businesses are the life-blood of Britain's economy. There are some 3 million of them, and they create employment for some 50 per cent. of the work force. They depend, as much as any other part of the economy, on a stable economic framework in which there are sound public finances, low inflation and sustainable growth—all of which conditions have been put in place by my right hon. and learned Friend the Chancellor of the Exchequer.

Economic and Finance Council

Mr. Soley: To ask the Chancellor of the Exchequer what decisions were reached at the last meeting of ECOFIN. [27033]

The Chancellor of the Exchequer (Mr. Kenneth Clarke): At its last meeting, on 22 May, the Council reached political agreement on a proposed investor compensation directive. We agreed that the conditions were now met for the disbursement of the 85 mecu loan to Ukraine which was first agreed in December 1994 and we reached agreement in principle to a further loan of up to 200 mecu, subject to conditionality. Lastly, the Council adopted a regulation to delay revaluation of the Belgian franc within the agrimonetary system.

Mr. Soley: Have there been any discussions at all in ECOFIN about the political framework that would be necessary to operate a single currency?

Mr. Clarke: ECOFIN has made quite a lot of progress talking about the technical issues that surround the


proposal to move to economic and monetary union. Obviously, there are considerable political implications in that and ECOFIN is composed of Ministers of Finance who discuss the politics of it, but these are early days. It is when the framework becomes clearer, the timetable becomes clearer and the number of states that comply with the convergence criteria becomes clearer that the political debate will no doubt deepen.

Mr. Wilkinson: As the mechanistic and regulatory impediments to a true, single, integrated market remain since the last meeting of ECOFIN, will my right hon. and learned Friend, when he goes to Brussels on Monday for its next meeting, say clearly to his counterparts on the Council that they really ought to get rid of the bottlenecks and impediments to free trade in the Community and pay less attention to harmonisation of exchange rates?

Mr. Clarke: I agree with my hon. Friend that the completion of the single market with the removal of all regulatory and other impediments to free trade and fair competition between the member states is extremely important. As he knows, the British Government have taken the leading part in that, and it was really following the Single European Act and the actions we took after that that the British paved the way for the creation of the single market. We intend to complete it. Anything that improves the workings of the market and removes barriers to or distortions of trade is, in my opinion, welcome.

Mr. Gordon Brown: Given the Chief Secretary's stated opposition this afternoon to the principle of a single currency and given the Prime Minister's statement earlier this week on the principle of a single currency that he is persuadable—and persuadable against it by the very group the Chancellor of the Exchequer accused this morning of right-wing xenophobia—will the Chancellor now confirm his position on a single currency? Is he, as he always was, in favour of the principle of a single currency—yes or no?

Mr. Clarke: I think the hon. Gentleman should consult an ear, nose and throat specialist, because he did not seem able to hear clearly what I said last night about my inflation target and I do not think he was quite able to hear what my right hon. Friend the Chief Secretary said a few moments ago, either. The position is that we negotiated an opt-out at Maastricht, which means that we were left free to decide for ourselves in due course, if and when the situation arose, whether to join an economic and monetary union.
We are now taking part in the discussions on what form that monetary union may take and, in due course, if any states go ahead, Britain will decide one way or the other. The decision, in my opinion, ought to be taken on a hard-nosed judgment of British interests, judged when we see what the details are. That is the principle on which the party of which I am a member fought the last general election and it is the policy recently restated by my right hon. Friend the Prime Minister. It is plainly the only sensible policy to pursue until we see whether economic and monetary union is going ahead in the EU.

Inflation

Mr. Knapman: To ask the Chancellor of the Exchequer for how long the underlying rate of inflation has been at or around its current level. [27034]

Mr. Kenneth Clarke: The retail prices index figures published this morning show that underlying inflation was 2.7 per cent. in May. Inflation has now been below 3 per cent. for 20 months, which is our best performance since 1961.

Mr. Knapman: I congratulate my right hon. and learned Friend on his speech at the Mansion house last night. Does he agree that the careful control of inflation is absolutely essential for the promotion and protection of the prosperity of middle England, especially those on lower incomes?

Mr. Clarke: I entirely agree with my hon. Friend. Anyone who aspires to govern this country and deliver the sustained recovery, without a return to boom and bust, that I think the population want must have a clear objective for inflation and must be capable of delivering it. We have a clear objective. We have been delivering low inflation. Those who criticise us appear to be incapable of making any useful contribution to the debate whatsoever.

Mr. Malcolm Bruce: Does the Chancellor accept that his 2.7 per cent. figure for underlying inflation is above his long-term target and that the Bank of England said last month that it would continue to be above his long-term target in two years' time? If that is the case next month, will he take action—yes or no? When he said that he was putting inflation back in the box, did he omit to tell us that there was no lid on the box?

Mr. Clarke: If the Liberal party or the Labour party would give us any figures at all as a basis for their economic policy, we should be able to judge whether they were capable of getting within 0.2 per cent. of anything. The current position is that we have delivered the best record on inflation since the early 1960s. That is one of the principal reasons why our economy is growing and our prospects are looking so much better. Last night, I made it quite clear that I would set policy for the foreseeable future on the basis that we were aiming at inflation of 2½ per cent. or less. We aim to get there by the end of this Parliament and we shall aim to keep it there thereafter. That is a clear policy, and we are showing ourselves capable of delivering it.

Mr. John Townend: I, too, congratulate my right hon. and learned Friend on the speech that he made last night, and especially on his statement that he wanted to follow the iron lady and become the iron Chancellor who is not for turning. Does he accept that I also welcome his warning to fellow Cabinet colleagues and, indeed, to Back-Bench colleagues, that he wants to cut taxes, but that he can do so only if he can cut spending?

Mr. Clarke: My hon. Friend and I agree strongly on that point. The Government are showing that they are capable of controlling public spending in order to achieve our low taxation goal. We think that we shall have a more successful and competitive economy, with more prosperity and more secure jobs, if we can reduce the proportion of national resources taken by the state. It is yet another sphere in which, as far as I am aware, we do not have the slightest indication from the Opposition about what proportion of GDP they think should be taken by the state, what their objectives are for taxation or


precisely what their views are on public spending, or at least how those of the Treasury relate to those of other Opposition spokesmen.

Mr. Gordon Brown: Will the Chancellor explain his extraordinary memorandum to Conservative Back Benchers last night? Why, having told the City that he would keep within his 4 per cent. inflation target all the time, did he say to his Back Benchers that he might meet it only most of the time? Why does he say one thing to the country and another in secret to the Conservative party?

Mr. Clarke: The document to which the hon. Gentleman referred was not especially secret. The policy that it sets out is exactly the same as that about which I spoke last night. The inflation target is 2½ per cent. or less which will, in practice, deliver inflation within a range of 1 to 4 per cent. That is the policy that we have been pursuing successfully, and I projected it forward.
Will the hon. Gentleman explain his extraordinary silence on the whole matter? He cannot even reply to letters from me in which I asked what inflation target he has in mind or whether he agrees with the decision that I took on interest rates more than a month ago. There is no piece of paper containing any details of any Labour policy on any these issues.

Mr. Dunn: The Government have made known their inflation target. Will my right hon. and learned Friend the Chancellor confirm when he last asked the shadow Chancellor to make known his inflation target and say what response he received?

Mr. Clarke: I think that we should take a leaf out of the Opposition's book and ask the Leader of the Opposition to hold an independent inquiry into whether the shadow Chancellor has an economic policy and, if he claims to have an economic policy, whether he is prepared to put a figure to it. At the moment, I find myself facing shadows, but invisible shadows who will not put forward any proposition of their own. The hon. Gentleman has lost his way on economic policy.

Fiscal Policy

Mr. MacShane: To ask the Chancellor of the Exchequer what meetings he has had in 1995 with the Trades Union Congress to discuss fiscal policy. [27035]

The Financial Secretary to the Treasury (Sir George Young): My right hon. and learned Friend has had no meetings so far this year with the TUC to discuss fiscal policy, but does expect to meet representatives of the TUC in the autumn before the Budget.

Mr. MacShane: May I put it to the Minister that, if this country is to make any serious progress on its economic policy, discussion with the body that represents 7 million people in industry on a regular, not corporate, basis is necessary and would be useful and that, until there is a renewal of dialogue across the industrial divide, Britain cannot expect fully to prosper?

Sir George Young: As I said, my right hon. and learned Friend looks forward to meeting the TUC against a background of the discussions leading up to his Budget. He had two meetings with the TUC last year, at the first of which there was very constructive dialogue about what the Government were doing on training, which received

wide support from the TUC, and also what we were doing on the industrial finance initiative. When the TUC comes to discuss fiscal policy with my right hon. and learned Friend, at least there is a policy to discuss.

Mr. Butterfill: When my right hon. and learned Friend meets the TUC in the autumn, will he take that opportunity to explain to it the extraordinary damage that would be done to our economy were we to adopt a national minimum wage? It would create massive unemployment, particularly in the holiday industry, which is so important to my constituency.

Sir George Young: I am sure that my right hon. and learned Friend would wish to make that point in a courteous but firm way. I was interested to see, in The Guardian on Monday, that the general secretary of Unison conceded that, were we to move towards a minimum wage, at the level at which he preferred, there would be job losses. There have been some estimates that there could be up to 800,000 job losses. My right hon. and learned Friend, who minds about unemployment, will indeed make that point to the TUC.

Mr. William Ross: Will the Minister give me an assurance that the fiscal policy that he is going to follow is a United Kingdom fiscal policy and that the blandishments from Dublin to the effect that there should be 25 per cent. value added tax and 10 per cent. corporation tax in Northern Ireland will be resisted?

Sir George Young: Yes, what my right hon. and learned Friend said at the Mansion house, the economic policy that he puts forward, is an economic policy for the United Kingdom.

Inflation

Mr. Clappison: To ask the Chancellor of the Exchequer what representations he has received concerning the control of inflation. [27036]

Mr. Kenneth Clarke: I have received many representations about the control of inflation. These reinforce my commitment to our objective of permanently low inflation.

Mr. Clappison: Is my right hon. and learned Friend aware that consumers and business men in my constituency will welcome the long-term commitment to low inflation that he has given; but when he hears the hon. Member for Dunfermline, East (Mr. Brown), will he exercise just a little caution, bearing in mind not only that the hon. Gentleman will not say what his inflation target is but that the one policy he does have—the introduction of a minimum wage—would cause inflation of its own accord, and that the last time the Labour party held office, inflation moved within a range of between 7 per cent. and 27 per cent. per year?

Mr. Clarke: My hon. Friend does well to remind us of the record. The fact is that the hon. Gentleman does not say whether he would have a higher inflation target for the next Parliament, thereby loosening policy, or whether he would have a lower target, thereby tightening policy. He does not say that he agrees with the Government—which I suspect is the case—because he cannot think of anything else to do. If he indicated anything else, he would have to answer my question about what his views are on interest rates.
I do not think that the hon. Gentleman believes in a minimum wage. I do not think that his leader does. This sits in a quite silly fashion compared with the current speeches that they are making about the principles of economic policy. I do not know why they do not stop refusing to put a figure on that. They will not put a figure on anything. Why do they not just drop it and adopt the shadow, at least, of our policy without giving it any substance?

Mr. Sheldon: Although the control of inflation must be a prime objective, in what he called his occasionally combative discussions with the Governor of Bank of England, will the Chancellor forcefully point out to him that there are other matters, such as investment and economic growth, that must be considered also?

Mr. Clarke: I do not regard low inflation as an aim in itself, and nor does the right hon. Gentleman, but low inflation is an essential precondition to getting prosperity and secure jobs, and the economic success, which other countries, such as Germany and Japan, have enjoyed in the past because they have enjoyed stable economic conditions. That is why the Governor and I are agreed on pursuing the targets that I have set out. The Governor welcomed what I said last night, and I quote:
The Chancellor has restated the Government's monetary policy objective—permanently low inflation—quite unambiguously this evening. I very much welcome that.
I look forward to continuing to work with the Governor to deliver that low inflation aim.

Mr. Brandreth: Does my right hon. and learned Friend agree that among the key groups who welcome low inflation and targeted low inflation are the elderly and the prudent? Does he recognise that in the year, for example, when my own father retired on a fixed income, inflation topped 27 per cent. under the previous Labour Government, and that retired and prudent people today will welcome a governing party that has a firm, precise and deliverable target for low inflation?

Mr. Clarke: I agree with my hon. Friend. He echoes the views of what I call middle England, which, for the benefit of Scottish nationalists, is middle Scotland as well. Those people who wish to work and to be responsible for their families, to save and to feel secure in their family finances, need low inflation. The experience of high inflation is that it destroys savings and creates instability in society. It robs the elderly and gives money to the improvident and those who borrow. It is also very destructive for investment and long-term economic prospects. For the past 20 months, we have delivered the best record on inflation that this country has seen since the early 1960s. I set out last night the Government's determination to continue to deliver that.

Mr. Ashton: I take it that it is in order to ask a question from the Government crib sheet which has been handed to Conservative Back Benchers and which my hon. Friend the Member for Hemsworth (Mr. Enright) found in a telephone box. Is the Chancellor aware that my constituents would prefer sound economics to soundbites on the management of the economy? Why does the Chancellor have to write down all these soundbites for all the people behind him?

Mr. Clarke: The hon. Gentleman has made an extremely good point. I assume that those who are responsible for that are in Conservative central office, and I shall ask them next time to distribute a similar sheet to Opposition Members so that they can find some questions to ask, because the shadow Chancellor of the Exchequer does not have a policy that is worth leaving on a piece of paper in a telephone box and he is giving no guidance whatever to those behind him.

Mr. Forman: I preface my question by saying that I have not had a chance to visit a phone box. However, I have a question for my right hon. and learned Friend. Is he aware that his counter-inflation policies have a real test behind them—market credibility? The record shows that the markets believe in that credibility and in that of the Governor of the Bank of England and the aim of getting inflation down and keeping it down. Is not the real contrast between my right hon. and learned Friend's sound policies, which will add to future growth, and those of the Opposition, that his have the ring of clarity whereas those of the hon. Member for Dunfermline, East (Mr. Brown) are surrounded by a number of obscurities?

Mr. Clarke: The Governor, in his speech last night, said that we seemed to be on course to see a peak of interest rates in this cycle of about half or less of the peak they reached in the previous cycle. My hon. Friend is right about market expectations on inflation and interest rates, which are coming down steadily as well. That is of real value to business, to investment and to people with mortgages who want to know what might happen to future interest rates. As we deliver, we are building confidence in a sustained recovery with low inflation, and it would be absolute folly to put all that at risk, certainly under pressure from a policy which is not represented by a figure on a piece of paper.

Mr. Darling: May I refer the Chancellor again to the private note that he sent to Conservative Members? It is printed on Treasury notepaper and the accompanying note is in the same type face as the Treasury press release. Therefore, it is not just a "piece of paper", as the Chancellor said. When he told Conservatives privately that the inflation target would be met only "most" of the time, was he giving Back Benchers a nod and a wink that he will take risks with inflation if that is needed to try to win the next election for the Conservative party?

Mr. Clarke: If the hon. Gentleman is going to get our briefing notes, he might read them and quote them properly. He paraphrases in the most loose and untidy fashion and he got it wrong. The inflation target that is set out in that note is the same as the target set out in my speech—2½ per cent. or below. As I explained in my speech last night, in practice one does not deliver one figure every month: there is fluctuation, sometimes down and sometimes above, but setting policy every month at that target should deliver inflation of between 1 and 4 per cent. The target is 2½ per cent. or less and that is the basis on which I shall set policy month by month when I have discussions with the Governor. It could not be plainer, it is as plain as a pikestaff, and the briefing said nothing different from that. It is the only policy going in this country at the moment. Fortunately, it is delivering considerable success.

Unemployment

Mr. Booth: To ask the Chancellor of the Exchequer what assessment he has made of the economic benefits of falling unemployment. [27037]

Mr. Aitken: Unemployment has fallen by 661,000 since December 1992. Our assessment is that this has made a major contribution towards the Government's aim of promoting rising prosperity for all.

Mr. Booth: As unemployment in Finchley has fallen by 16 per cent, over the past year, I am grateful to my right hon. Friend for his assessment of unemployment. Has he taken time to look at unemployment in France and Spain, and do not the very much worse figures in those countries exist because they have adopted just the sort of policies that the Labour party would impose on us?

Mr. Aitken: My hon. Friend is right to highlight the fact that in Britain unemployment is falling faster than in any other major country in the European Union and that it is far lower than in France and Spain. Youth unemployment is 50 per cent. higher in France and 250 per cent. higher in Spain than in Britain. My hon. Friend asks why those differences, which are so much in our favour, have occurred. The answer is that those countries have the minimum wage; we do not. Those countries have a social chapter; we have opted out of a social chapter. Those countries have rigid labour markets; we have deregulation. We have Conservative free market, supply-side reforms and policies, whereas France and Spain have continued to cling to the same tired old socialist policies that the Labour party still espouses.

Ms Armstrong: I am sure that the right hon. Gentleman recognises that many of the problems that he has identified have led in this country to job insecurity, which I know is a matter about which he himself is concerned. Has he noticed that a survey said yesterday that more people in work are increasingly insecure about the future and worried about losing their job? Does he not understand that that insecurity, coupled with the still far too high unemployment levels, mean that much of the Government's strategy for economic growth is put under threat?

Mr. Aitken: That is a feeble retort to the case that I made in the supplementary answer to my hon. Friend the Member for Finchley (Mr. Booth). As he reminded us, unemployment in his constituency has come down by 16 per cent., so people are not feeling so insecure in Finchley. Since December 1992, unemployment in Durham, North-West, which the hon. Lady represents, has come down by nearly 1,000 people—a fall of 23.3 per cent., so she does not have much to complain about.

Mr. Gallie: In response to the hon. Member for Durham, North-West (Ms Armstrong), does my right hon. Friend agree that the greatest threat to workers' jobs would come with the election of a Labour Government and that therein lies the greatest feeling of insecurity?

Mr. Aitken: My hon. Friend is absolutely right. There are many Labour policies, such as a minimum wage, that will destroy jobs. He represents a constituency in Scotland and he will be well aware that the policies for a tax-raising Scottish Assembly are absolutely guaranteed to scare away the magnificent flow of inward investment projects that are coming into Scotland at a rate of two a week—

they will go as soon as there is a tax-raising Scottish Parliament. All the extra policies, such as the minimum wage, and all the high expenditure will destroy jobs faster than anything else.

Housing Market

Mr. Corbett: To ask the Chancellor of the Exchequer if he will make a statement on the financial implications of the state of the housing market. [27039]

The Paymaster General (Mr. David Heathcoat-Amory): For the average mortgage holder, housing costs are £1,600 per annum lower than in 1990.

Mr. Corbett: The Minister's complacency about the housing crisis will appal millions of people. With cuts in tax relief on mortgages costing £20 a month and, from October, another £20 a month for people on income support, why is it that the Government keep on hurting home owners rather than helping them?

Mr. Heathcoat-Amory: I am not the slightest bit complacent about people who find themselves with negative equity, but I am entitled to point out that, as a result of lower inflation and lower interest rates, since 1990 the average mortgage holder is £130 a month better off. The best long-term policy to help those existing householders and people who wish to own their houses is sustainable growth, with its consequence of rising earnings, combined with low inflation, which is what we are delivering.

Mr. Rowe: Did my hon. Friend experience, as I did at the height of the housing boom, large numbers of constituents saying how extremely worried they were about the prospects of their children being able to get on the housing ladder? Do not steady and reduced house prices make it much easier for young people to get started?

Mr. Heathcoat-Amory: My hon. Friend is right. The conditions of the housing boom—such as those that we experienced—are not the friend of householders, especially young people who wish to own their houses. Although there is a problem of negative equity at present, its extent has reduced. Indeed, we should remember that last year almost 500,000 people became house owners for the first time.

Ms Primarolo: Did the Paymaster General hear the unfortunate comments by the Chancellor on the "Today" programme this morning when he ruled out any special measures to help home owners? Will he confirm that that complacent view will continue and that there is to be no assistance for home owners in the present housing crisis?

Mr. Heathcoat-Amory: My right hon. and learned Friend is not the least bit complacent about this issue, but he is right to point out that the best long-term help that we can deliver to households, as to others sectors of the economy, is sustainable growth with low inflation, which is exactly what we are delivering.

Dr. Spink: What would be the impact on the housing market and interest rates if my hon. Friend were to follow the Labour party's policy on inflation—or does he not know?

Mr. Heathcoat-Amory: My hon. Friend is right. High inflation, with the consequence of high interest rates,


would crucify householders with outstanding mortgages. We must never allow the Labour party to be given a chance.

Interest Rates

Mr. Simon Hughes: To ask the Chancellor of the Exchequer what is his policy on interest rates. [27040]

Mr. Kenneth Clarke: Interest rates are set to deliver permanently low inflation and ensure that the present healthy recovery is sustained.

Mr. Hughes: Is not the truth somewhat different? Has not the Financial Times got it right when it says that the Chancellor has fudged policy on interest rates and that he is keeping interest rates down, stoking the economy and preparing for short-term tax cuts as his preferred solution?

Mr. Clarke: The hon. Gentleman has just arrived in the Chamber out of breath and did not hear the rather lengthy exchanges that have already taken place about all this. The inflation target is 2½ per cent. or less. I set monetary policy to achieve that target. Given that there are always unpredictable things from month to month, that policy will keep inflation between 1 per cent. and 4 per cent. We have set that target for the end of this Parliament and we are well on course to deliver it. Now we are going to sustain it throughout the next Parliament as well.
Tax cuts are a legitimate aim. To be a competitive economy, we need to continue to be a low-taxation economy. But we can do that only when spending is under control—it is being kept under control—and when it is in the interests of the economy we can then cut tax.

Mr. Mans: Does my right hon. and learned Friend agree that one way to ensure that interest rates are higher than necessary is to have no policy on inflation, no policy on public expenditure and no policy on taxation, like the Labour party?

Mr. Clarke: I rather imagine that if the hon. Member for Dunfermline, East (Mr. Brown) ever met the Governor of the Bank of England he would ask him for a quick little note on what monetary policy is for and how one ought to approach it. When the hon. Gentleman sets out his propositions and they are put alongside the spending promises of all his shadow colleagues, it is quite obvious that high inflation will be only one of the extremely bad consequences of having a Labour Government.

Mr. Foulkes: Is not it true that, on interest rates, the Chancellor pays more attention to the representations of Tory Back Benchers in marginal seats than to the Governor of the Bank of England? [Interruption.] Is not that more to do with his medium-term aspirations to be Leader of the Opposition than the long-term interests of British people?

Mr. Clarke: I take first and foremost the advice of the Governor of the Bank of England. I listen to the advice of my Back-Bench colleagues who understand economic policy and specialise in it. I do not get any advice from the Labour party because it does not seem to have any opinion on the subject. My policies have delivered the best record of inflation that this country has seen since

the early 1960s. We are well on course to deliver permanently low inflation for the rest of the decade.

Public Spending

Mr. Amess: To ask the Chancellor of the Exchequer if it is his policy to reduce public spending as a percentage of gross domestic product. [27042]

Mr. Aitken: Yes. The Government's policy, unlike that of the Labour party, is to reduce the share of national income taken by the state.

Mr. Amess: I welcome my right hon. Friend's robust commitment to controlling state expenditure. Will he confirm that that is in marked contrast to new Labour, which apparently has no commitment to increase spending, taxation or borrowing, but which in reality can be relied upon to increase all three?

Mr. Aitken: My hon. Friend is right. Scratch the soundbites of new Labour and we find old spending Labour in full swing. Let me list, for the benefit of my hon. Friend and of the House, the high spending to which the Labour party is committed. It includes income support for 16 and 17-year-olds, new regional assemblies and development agencies, an emergency employment programme, a defence conversion agency, a flexible decade of retirement, and above all, a national minimum wage. Labour is still the same old high-spending party, and it will be a high taxation party too.

Ms Eagle: After 16 years in power, is it not a demonstration of the Government's utter failure that GDP continues to rise because they are paying the cost of economic failure by keeping so many people on the dole, at a cost of £9,000 per person? When will the Government tackle the problems rather than the symptoms of their utter failure to adopt a decent economic policy?

Mr. Aitken: As the hon. Lady is so interested in the public expenditure dimension of unemployment—I take it that that is what her question is about—she may like to know that the unemployment total is falling at a rate of 1,000 per day. Every time 100,000 people come off the unemployment register, £400 million or so is saved in public expenditure. That is good news for the taxpayer as well as for the unemployed people who become employed.

Brown's Law of Economics

Mrs. Lait: To ask the Chancellor of the Exchequer what study his Department has made of Brown's law of economics. [27043]

Mr. Kenneth Clarke: Brown's law is receiving the study that it deserves.

Mrs. Lait: As my right hon. and learned Friend continues his study of Brown's law, does he agree that its contention that borrowing should not exceed investment is a useless guide to sound public finance, as it sets no level for investment or for borrowing and clearly avoids setting any inflation target, let alone one as low as 2.5 per cent.?

Mr. Clarke: My hon. Friend is correct. That is one of the few specific statements that the hon. Member for Dunfermline, East put into Brown's law, but upon closer examination it turns out to be simply an excuse for having


no limit on the amount of borrowing on which one can embark in any one year. That is one of the many examples of what the policy would mean, and it would represent a considerable loosening of present policy, although the hon. Gentleman claims that Labour could match the growth with low inflation that the Government have achieved.

Mr. Campbell-Savours: Would not the costs of speculative and widespread currency exchange transactions be greatly reduced, indeed ended, if we had a single European currency? How long must British tourists throughout Europe continue to be ripped off by banks because politicians cannot face their responsibilities?

Mr. Clarke: It is tautologous to say that economic and monetary union would get rid of wild fluctuations in currencies and transaction costs across the foreign exchanges. We have preserved the position that will allow us to choose whether to join in economic and monetary union with the other European member states once the details have been put in place and when we see the conditions for convergence. We shall then decide whether it will be in Britain's interests to join.

Mr. McLoughlin: Does my right hon. and learned Friend agree that one of the true principles of Brown's law is to reverse the Government's trade union reforms? Would not one of those reversals mean that people such as Mr. Jack Dromey would not be able to challenge Mr. Bill Morris for the general secretaryship of the Transport and General Workers' Union? Would it not be a great pity if Mr. Dromey were prevented from earning income to support his family?

Mr. Kenneth Clarke: I am certainly not going to take a position on the internal battles of the Transport and General Workers Union. It is true that the Labour party is a little more precise in what it believes it will do so far as trade union law is concerned than it is on economic policy. If Brown's law sheds any light on the future control of the trade union movement over Labour policy, I suppose it has some value.

Small Investors

Mr. Sheerman: To ask the Chancellor ofthe Exchequer what steps he is taking to increase the influence of small investors in corporate governance. [27044]

Sir George Young: I expect that the work of the Greenbury committee, and the successor to the Cadbury committee will continue to bring improvements in corporate governance.

Mr. Sheerman: Is the Minister aware that many small shareholders in middle England would have thought that the Chancellor was an iron Chancellor if he had used his speech last night at the Mansion House to tell the City's institutional barons that it is about time they cleaned up their act, and stopped using their block vote to deprive ordinary shareholders of a voice at the annual meetings of companies?

Sir George Young: The average small shareholder has done well under a Conservative Government. Since 1979, the average small shareholder with a portfolio of UK shares will have seen a real rate of return of 10 per cent. per annum. The Government have extended the benefits of shareholding. There were 3 million shareholders when we started, while there are 10 million today.

Oral Answers to Questions — PRIME MINISTER

Engagements

Mr. Mans: To ask the Prime Minister if he will list his official engagements for Thursday 15 June. [27062]

The Lord President of the Council and Leader of the House of Commons (Mr. Tony Newton): I have been asked to reply.
My right hon. Friend the Prime Minister is currently in Canada attending the G7 conference.

Mr. Mans: Does my right hon. Friend agree that the release of the remaining members of the Welch Fusiliers and of the RAF flight lieutenant by the Bosnian Serbs shows clearly that the Government's robust response to the taking of the hostages was the right one? Does he further agree that we now have an opportunity to reassess how our diplomatic and military efforts in Bosnia can best be taken forward?

Mr. Newton: The whole House will want to join in my hon. Friend's welcome of the release of nearly all of the remaining hostages, including the British ones, and it is essential in our view that the other 26 are released immediately. My hon. Friend was right to say that the Government's policy has been vindicated. Indeed, by standing firm, the whole international community has shown that it will not submit to blackmail and terrorism of that kind. I share the view implicit in my hon. Friend's remarks that it is vital that we redouble our efforts to achieve a negotiated settlement.

Mr. Prescott: Does the Leader of the House think that it is really wise for the Prime Minister to be out of the country at this time?

Mr. Newton: At a time when it is widely acknowledged throughout the international community that this country's economic performance in growth, increasing investment, improving our trade performance, keeping inflation down and reducing unemployment makes it a world leader in that respect, it is quite right that my right hon. Friend should be sharing our experience with our partners in the G7.

Mr. Prescott: With Baroness Thatcher making it clear that the Prime Minister is not up to the job, the President of the Board of Trade professing loyalty while preparing to take over the Prime Minister's job and the Chancellor attacking his Tory critics as right-wing xenophobes, is not it obvious that the Tory party is in a state of civil war and, like the Prime Minister, is clearly unfit to govern this country?

Mr. Newton: If the right hon. Gentleman believes that—against the background of the account of our successful economic policies which I have just given—he will believe anything. He might also explain why his right hon. Friend the Leader of the Opposition took the risk of letting him ask questions from the Dispatch Box today. [Interruption.]

Madam Speaker: Order.

Mr. Barry Field: To ask the Prime Minister if he will list his official engagements for Thursday 15 June. [27063]

Mr. Newton: I have been asked to reply.
I refer my hon. Friend to the answer I gave some moments ago.

Mr. Field: Does my right hon. Friend agree that the Government's trade union reforms reintroduced democracy into the Labour movement? Will he therefore ask the committee considering the Nolan report whether the 165 Members of the parliamentary Labour party who are sponsored by trade unions will resign if the long-overdue reform of the trade union block vote does not go ahead? In particular, if the Transport and General Workers Union gives that reform the order of the sharp elbow, will the Leader of the Opposition sever all his links with that union?

Mr. Newton: I am not quite in a position to give my hon. Friend the assurance that he seeks because the committee to which he refers has not yet met and, therefore, has not made a decision about who should be its chairman. In one way or another, however, I will ensure that my hon. Friend's request is drawn to the committee's attention. No doubt the right hon. Member for Kingston upon Hull, East (Mr. Prescott) will draw the second half of my hon. Friend's question to the attention of his right hon. Friend, the Leader of the Opposition.

Mr. Ashdown: Is not it absolutely clear from the Chancellor of the Exchequer's statement last night that, when it comes to a policy on inflation, the Government's policy is very clear—a target is a target, but only so long as it does not get in the way of a tax cut?

Mr. Newton: What is clear from my right hon. and learned Friend's speech last night is that the Government's commitment to low inflation remains absolutely unshakeable and clear and that the commitment to low inflation is part of a range of policies, which I have already described and which will make it possible for us to consider tax cuts in due course when it is appropriate and responsible to do so.

Mr. Heald: To ask the Prime Minister if he will list his official engagements for Thursday 15 June. [27064]

Mr. Newton: I have been asked to reply.
I refer my hon. Friend to the answer I gave some moments ago.

Mr. Heald: Will my right hon. Friend join me in welcoming this week's further fall in unemployment, which is down for the 21st month in a row and down 500,000 in the past two years? Does he agree that it is not coincidence, but the result of the Government's policies and that if we had a guaranteed minimum wage as the Labour party suggests—it is no good the right hon. Member for Kingston upon Hull, East (Mr. Prescott) looking glum as he has admitted this—there would be a shake-out of jobs and any silly fool knows that? Does my right hon. Friend agree that, in the interests of Britain, that policy must be reversed?

Mr. Newton: Although it is sometimes difficult to glean from the observations of the Opposition, I imagine that the whole House will welcome the fact that unemployment has fallen by 350,000 in the past year and, indeed, that employment has grown by more than 170,000 in the year to March. I see the hon. Member for Dunfermline, East (Mr. Brown) giggling in some way—

it is especially ironic that, not so long ago, he forecast that unemployment would go on rising month in and month out. No doubt he will be reassessing his forecasting methods. At the same time, he might reassess policies such as the social chapter and the minimum wage, which would certainly push things in the other direction.

Mr. Madden: May I ask the Leader of the House a question, of which I gave the Prime Minister notice on Tuesday; will he comment on the tragic events in Bradford at the weekend? In condemning without reservation those who commit serious criminal damage, does the Leader of the House share my deep concern about the large number of very young people who are so deeply angry, disaffected and alienated, not only in Bradford but in many other inner cities throughout the country? Will he support an independent public inquiry to establish what happened in Bradford—[Interruption]. If the House—

Madam Speaker: Order. I hope that the hon. Gentleman will come to his point as I have other questioners to call.

Mr. Madden: But this is a serious matter to the majority of hon. Members on both sides of the House. Will the right hon. Gentleman support an independent public inquiry, which can identify the causes of the serious public disorder that took place in Bradford at the weekend and draw attention to the action that can be taken by all public agencies, including the Government, to bring back hope to young people, their parents and local communities?

Mr. Newton: First, I am grateful, as everyone in the House will be, for the hon. Gentleman's initial acknowledgement that, whatever arguments he or anyone else cares to adduce, we all agree that there can be no excuse for the kind of behaviour that we saw in Bradford at the weekend.
So far as the inquiries are concerned, the hon. Gentleman will know that the Police Complaints Authority is supervising the investigation of a number of complaints made against the police during the weekend. That authority is independent and will do a thorough job. The work will be undertaken by officers from another force—

Mr. Madden: indicated assent.

Mr. Newton: I am glad to see the hon. Gentleman acknowledge that. I think that that is the appropriate action to take.
As for the rest of what the hon. Gentleman said, I am glad to know that discussions are now taking place between the police and members of the Asian community in Bradford. That is the way to explore other problems.

Mr. Hendry: To ask the Prime Minister if he will list his official engagements for Thursday 15 June. [27065]

Mr. Newton: I have been asked to reply.
I refer my hon. Friend to the answer I gave some moments ago.

Mr. Hendry: Has my right hon. Friend ever seen a shred of evidence that suggests that people in this country want more government rather than less? Is he aware that my constituents in High Peak would be horrified at the


prospect of another tier of regional government based perhaps 100 miles away in Leicestershire? Is not it time for those people who advocate such a policy to admit that what they are really saying is that we should have more bureaucracy, more waste, more remoteness and more taxes?

Mr. Newton: Labour's plans for regional government would certainly end up simply sucking responsibility away from many existing councils that are closer to the people whom they represent. As one of Labour's think tanks made clear yesterday, English regions would be "essentially artificial constructs", which is true of more or less the whole of Labour's policy in that area.

Mr. Macdonald: Is the Leader of the House aware of the growing anger, not just in Britain but on the continent, about the plan to dump the Brent Spar oil platform at sea, at a spot not more than 150 miles from my constituency? Is not it a disgrace that Shell should have tried to hide the true costs of recycling the oil platform on land? Is not it time that the Government intervened to halt the tow of the Brent Spar and allow a proper examination of the true benefits of recycling on land, which would be better for the environment and for jobs?

Mr. Newton: The hon. Gentleman knows that the Government are following the principle of disposal on a case-by-case basis. In the Government's view, the deep-sea disposal of Brent Spar is consistent with the UK's international commitment, and all necessary approvals and consents have been obtained. It is also the Government's view that it is the best practicable environmental option available.

Mr. Jenkin: To ask the Prime Minister if he will list his official engagements for Thursday 15 June. [27067]

Mr. Newton: I have been asked to reply.
I refer my hon. Friend to the answer I gave some moments ago.

Mr. Jenkin: Will my right hon. Friend draw the Prime Minister's attention to last week's report by the Social Security Select Committee into the growth of social security, which vindicates the Government's view that the continuing growth of social security spending is a cause for concern? Is it not time that we tackled that problem? Is not the test of the Opposition whether they start to support those reforms, otherwise they betray the fact that they have no commitment to dealing with the growth of public expenditure?

Mr. Newton: My hon. Friend is right to draw attention to that matter. The increase in social security expenditure in its various forms, under various pressures including

demographic trends, is a matter of concern throughout the western world and perhaps beyond. Against that background, it has been absolutely right for my right hon. Friend to look carefully at the social security system to ensure that the bill is constrained while at the same time meeting proper priorities. That is what he seeks to do and it deserves the support of hon. Members on both sides of the House.

Mrs. Anne Campbell: To ask the Prime Minister if he will list his official engagements for Thursday 15 June. [27068]

Mr. Newton: I have been asked to reply.
I refer the hon. Member to the answer I gave some moments ago.

Mrs. Campbell: Will the Leader of the House ask the Prime Minister whether, while considering what to do about the damage that his Government have caused to home owners with negative equity, he will consider the misery caused by the removal of mortgage interest relief to those who are unemployed and the damage caused to those who need social housing by the £600 million of cuts to housing associations?

Mr. Newton: I shall always draw the hon. Lady's questions to the attention of my right hon. Friends. However, she might have referred to the fact that negative equity and repossessions are sharply down since the 1991–92 peak, and that average mortgage payments have fallen by £130 a month since October 1990. On the hon. Lady's first point, a survey has shown that two thirds of lenders intend to buy block protection in the area to which she referred, and the majority of those, including the Skipton building society, to which my right hon. Friend referred last week, intend to make no charge.

Mr. Marland: Is my right hon. Friend aware that, in the county of Gloucestershire, under the profligate Lib-Lab pact local government, the schoolchildren are being cruelly misused? Is he aware that, as a result of the historic overspending in Gloucestershire, the county council has decided to cut spending on education? Is he further aware that some of us are tired of being a whipping boy for Lib-Lab extravagance, and that it is time that we considered lifting the cap on local authority expenditure?

Mr. Newton: I see that it has been reported in some parts of the press that the Leader of the Opposition has managed to persuade the Labour councillors of Mid-Glamorgan to reduce their demands for increased allowances from the exorbitant to the extortionate. I hope that he might now use his influence with some other Labour local authorities to persuade them to pursue sensible and proper policies.

Business of the House

Mrs. Ann Taylor: May I ask the Leader of the House for details of future business?

The Lord President of the Council and Leader of the House of Commons (Mr. Tony Newton): The next instalment of the serial. The business for next week will be as follows:
MONDAY 19 JUNE—Opposition Day (14th allotted day). Until about 7 o'clock there will be a debate entitled "The Need for an Independent Inquiry into the BMARC Affair", followed by a debate entitled "Government Failure on Overseas Aid". Both debates will arise, I need hardly say, on Opposition motions.
TUESDAY 20 JUNE—Until about 7 o'clock, Second Reading of the Mental Health (Patients in the Community) Bill (Lords). Remaining stages of the Town and Country Planning (Costs of Inquiries, etc.) Bill.
WEDNESDAY 21 JUNE—Until 2.30 pm, there will be debates on the motion for the Adjournment of the House.
Debate on the European Union on a motion for the Adjournment of the House.
THURSDAY 22 JUNE—Remaining stages of the Crown Agents Bill (Lords).
FRIDAY 23 JUNE—The House will not be sitting.
The House will also wish to know that European Standing Committee B will meet at 10.30 am on Wednesday 21 June to consider European Community document No. 10911/94 relating to economic growth and the environment.
MONDAY 26 JUNE—I understand that the Chairman of Ways and Means is expected to name opposed private business for consideration. In addition, the House will be invited to consider Lords Amendments to the Health Authorities Bill and to the Jobseekers Bill.
Subject to the progress of business, it will be proposed that the remaining stages of the Environment Bill (Lords) are taken on Tuesday 27 June and Wednesday 28 June. Government business will also be taken on Thursday 29 June and Friday 30 June, which, in the case of that Friday, is a sitting day. I should say, however, that I would expect the business on the Friday to be on a motion for the Adjournment.
[Wednesday 21 June: Debate on the European Union—Relevant Documents: White paper on Developments in the European Union January-June 1994 (Cm 2675); White paper on Developments in the European Union July-December 1994 (Cm 2798); European Community document COM (95) 333 relating to the Green paper on the practical arrangement of the introduction of the single currency; Unnumbered explanatory memorandum of 6 June 1995 submitted by Her Majesty's Treasury on the European Commission's recommendation for the broad guidelines of the economic policies of the member states and the community, drawn up in conformity with article 103 (2) of the Treaty establishing the European Community; European Community document EP: A4–0102/95 relating to a European Parliament Resolution on the Functioning of the Treaty on European Union with a View to the 1996 Intergovernmental Conference—Implementation and Development of the Union; European Community Document SEC (95) relating to the Report of the European Commission on the operation of the Treaty

of the European Union; Report of the Council of the European Union on the Functioning of the Treaty of the European Union (Cm 2866); Report by the Court of Auditor to the "Reflection Group" on the operation of the Treaty of European Union; Report of the Court of Justice on Certain Aspects of the Application of the Treaty on European Union; European Community Document 7221/95 relating to the White paper: Preparation of the Associated Countries of Central and Eastern Europe for integration into the internal market of the Union; European Community Document 12269/94 relating to a Commission communication on recognition of qualifications for academic and professional purposes; Letters from the Minister of State at the Department of Employment to the Chairman of the House of Commons European Legislation Committee dated 23/3/95 and 31/3/95 concerning a Resolution on the implementation of directives in the social field.
European Standing Committee B—European Community document: 10911/94, Economic Growth and the Environment. Relevant European Legislation Report: HC 70-iv (1994–95).]

Mrs. Taylor: I thank the Leader of the House for that information. Regarding the Jobseekers Bill, which the Leader of the House has announced will appear before the House again on Monday week, when will Ministers give an indication of whether they intend to accept their defeats in the House of Lords? Will the Leader of the House ensure that full information about that is supplied before the deadline for the tabling of amendments, so that decisions can be taken after proper consultation, discussion and reflection, because those amendments will have to be tabled next week?
Secondly, may I ask the Leader of the House about the Criminal Injuries Compensation Bill? Victims of crime throughout the country will not understand the Government's refusal to have a proper debate on the Bill. They will also fail to understand the Government's reluctance to disclose the fact that millions of crime victims who are self-employed or on low pay will lose under the new system as a result of the new time limit that Ministers are trying to smuggle through the Parliament. The Bill went into Committee only a week ago today. Will the Leader of the House give an assurance this afternoon that all aspects of the Government's changes to the system will be considered fully in Committee?
Thirdly, will the Leader of the House arrange for the Secretary of State for Employment to make a statement next week about the outcome of the International Labour Organisation annual conference which is taking place this week in Geneva? It has issued a statement deeply regretting and deploring the failure of British Ministers to solve the problem of the trade union ban at Government communications headquarters. Will Her Majesty's Government accept the proposed ILO mission to arbitrate in the matter of the trade union membership ban?
Finally, I press the Leader of the House yet again for a debate on the economy. I have raised the matter several times during business questions, as have hon. Members on both sides of the House. We must have an economic debate before the Budget statement. The Leader of the House must recognise that an economic debate is becoming increasingly urgent, not least because of questions surrounding the Chancellor's words last night


and the central office briefing. When will we have an economic debate, and when will we know the date of the Budget statement in the autumn?

Mr. Newton: I am in a position to respond somewhat more positively to the hon. Lady's final questions than to some of her earlier ones. That probably means that I should conclude my remarks by responding to her latter questions, but I shall go straight to them now.
We need to have a debate on the economy before the summer recess. I must obviously add a qualification about uncertainties at this stage, but it is my intention—subject to those uncertainties—to have a debate on the economy on Wednesday 12 July. I can inform the House that my right hon. and learned Friend the Chancellor of the Exchequer proposes to introduce his Budget statement on Tuesday 28 November.
I now turn to the hon. Lady's other questions. So far as the Jobseekers Bill is concerned, I can do no more than ensure that my right hon. Friend the Secretary of State for Employment is aware of the hon. Lady's request. I shall bring the hon. Lady's request for a statement to the attention of the Secretary of State, but I make it clear that the Government do not accept that their policies in respect of GCHQ are inconsistent with their obligations to the International Labour Organisation.
I have not yet received an account of this morning's proceedings on the Criminal Injuries Compensation Bill in Committee. As with any legislation, the Government are concerned to see that it is discussed properly in the appropriate manner, while taking account of the need to make progress.

Sir Anthony Grant: Has my right hon. Friend noticed in recent years the slow, inexorable intrusion of the judiciary into the business of the Executive and of the legislature? Does he share my view that the first principle of parliamentary democracy is that Parliament is answerable not to outside bodies or persons, no matter how eminent, but to the electorate alone? Will it be possible to have a general debate on that increasing constitutional problem?

Mr. Newton: I note my hon. Friend's concern and the request that he has made, although I am certainly not in a position to undertake to make time available for an early debate on that matter. We need to bear in mind the fact that it is for the courts to interpret the laws passed by Parliament. If that interpretation turns out to be different from what was intended, Parliament must then decide whether to change the law.

Ms Liz Lynne: Following the petition that I delivered to 10 Downing street about the crime rate in the north-west and the recent debate on drugs in the House, will the Leader of the House make time for debate next week on the causes of crime, particularly the link between drug abuse and crime?

Mr. Newton: I understand why the hon. Lady raised that point. No doubt she was unable to be here last Friday, when we had a full debate, to which her Front Bench contributed, on drug abuse. However, I cannot promise a further early opportunity.

Mr. John Butcher: May I support the hon. Member for Rochdale (Ms Lynne) in calling for a debate on law and order? What society have

we become, when evil and violent people can randomly select a woman on the streets of London, take her away and rape her with impunity, because they no longer fear the law?
During such a debate, may we examine why the Tory party, the Cabinet and successive Home Secretaries are united and vehement in their defence of law and order, but when the law is administered out there in the country, the civil liberties of criminals seem to be safeguarded more vigorously than those of the population at large?

Mr. Newton: I am sure that the House will agree that it is important to strike the right balance. Neither aspect of civil liberty to which my hon. Friend has referred can be ignored. He will be aware that my right hon. and learned Friend the Home Secretary, by proposed changes in the law and reforms in the organisation and management of police forces, is seeking to direct attention firmly and strongly to exactly such concerns as my hon. Friend has expressed.

Mr. Eddie Loyden: Is the Leader of the House aware of the widespread concern in the House about the Derbyshire? The House should know that the two objectives of the inquiry are the Derbyshire itself and the wider issue of safety at sea. There is concern that Lord Donaldson's terms of reference fall far short of what is required to reach those objectives. Will the Leader of the House ensure that the terms of reference are published and copies placed in the House of Commons, so that hon. Members can see them?

Mr. Newton: I have several times paid my respects and those of the whole House to the way in which the hon. Gentleman has followed this matter over a long period. In that spirit, I shall draw his request to the attention of my right hon. Friend the Secretary of State for Transport.

Mr. David Ashby: Has my right hon. Friend seen that a jury today returned a verdict in favour of Mr. Souness in respect of the disgraceful libel by a national paper, the Daily Mirror, about the personal life of Mr. Souness? Can hon. Friend say when we shall have a privacy Bill to put a stop to such behaviour by newspapers?

Mr. Newton: I am aware of my hon. Friend's strong interest in the subject, and understand it. Only this afternoon, my right hon. Friend the Secretary of State for National Heritage is continuing work towards, among other matters, the response due to the Select Committee on National Heritage on that subject.

Mr. George Stevenson: In view of the recent opinion poll showing that 63 per cent. of the population blame the Government for the housing crisis, and the Shelter report that 700,000 people have lost their homes due to repossessions since 1985, will the Leader of the House provide a debate in Government time to discuss what can only be described as a national scandal presided over by the Government of which he is a member?

Mr. Newton: I made some comments on related matters a few moments ago, wearing my deputising hat, and I cannot add to them.

Mr. John Marshall: Has my right hon. Friend seen early-day motion 1219, which now has nearly 200 signatures?
[That this House calls on the Government to acknowledge that over 3,000 people with haemophilia have been infected with the hepatitis C virus (HCV) as a result of NHS treatment with contaminated blood products to recognise that over 50 people with haemophilia are now understood to have died from liver disease contracted as a result, and to consider giving similar financial assistance to those infected with HCV, who currently receive no additional help, as for those infected in the same way with HIV who have been compensated by the Government.]
Does he agree that it is morally and logically unfair to deny compensation to those who have been infected with hepatitis C, perhaps mortally, through treatment on the national health service?

Mr. Newton: Once again, I have good reason greatly to respect my hon. Friend's interest in such matters. It is, of course, an unhappy fact that the patients about whom he is concerned received the best treatment available in the light of medical knowledge at the time. He will acknowledge that to offer compensation when no negligence or neglect was demonstrated would be a significant and substantial step.

Mr. Andrew Faulds: Would it not be advisable that the House, sooner rather than later, should debate the appalling social damage being done by the national lottery to the well-being of the folk of this country, and the total improprieties of the profit levels of the company running it?

Mr. Newton: Against the background of the huge sums of money being raised for the arts, sport, heritage and a number of other important social causes, the hon. Gentleman's description of the consequences of the lottery is—to put it mildly—an exaggeration. Secondly, Camelot's bid to run the lottery, which has proved such a great success, involved the lowest costs of the kind that the hon. Gentleman is talking about of any of the bids.

Mr. Tony Marlow: Would it be in order to make a helpful suggestion to the Government? There is to be a debate next week on Europe, so would it be possible for the Government to make a commitment to a referendum if ever a single currency were put before the country? In that way, the Government would be able to unite the right-wing xenophobes and the left-wing Euro-quislings among their supporters.

Mr. Newton: It is certainly well in order, if slightly out of the usual run of things, for my hon. Friend to make a helpful suggestion; but I am not in a position to add to what the Prime Minister said most recently last Tuesday, or to what was said in a number of the exchanges during Treasury questions today.

Mr. Alex Salmond: Is the right hon. Gentleman aware of the vigorous debate in the European Standing Committee last Tuesday, when a number of hon. Members expressed serious concerns about the lack of direction in the Government's fisheries policy, especially in relation to Spain's integration in the common fisheries policy? Is he aware that that debate was marked by an anxiety on the part of the Fisheries Minister not to return the subject to the Floor of the House? Can

he at least give us an undertaking that there will be a statement early next week on the outcome of today's Fisheries Council meeting?

Mr. Newton: In a sense, the hon. Gentleman has answered his own questions. The need for parliamentary consideration before today's Council was one of the factors rendering the debate necessary. Of course, as always, consideration will be given to the appropriateness of a statement, in the light of today's discussions.

Mr. Jacques Arnold: May we have a debate next week on the value for money and freedom of decision taking being enjoyed by grant-maintained schools? I am thinking of the seven out of nine secondary schools in my constituency and about 1,000 elsewhere. It is clear that these facts are not getting across enough—although the Leader of the Opposition understands them, to the benefit of his own family. But I am not so sure that these benefits are clearly understood by the Opposition in general, and it is obvious that they are not understood by Labour councillors up and down the country, who are spending council tax payers' money on opposing parents' decisions to go grant-maintained.

Mr. Newton: I share my hon. Friend's hope that the Leader of the Opposition might divert some of his time, among other things, to securing a more sensible and more responsible approach by Labour authorities to this subject.

Several hon. Members: rose—

Madam Speaker: Order. I seek the co-operation of the House. We have an important debate coming up, for which I will have to limit speeches to 10 minutes, so it will be difficult to call all hon. Members who are seeking to ask a business question if they take a long time asking that question. I shall do my best, without commitment, to call them all; but I want one brief question in each case, and a brisk reply.

Mr. David Winnick: As virtually every national newspaper is stating that the Prime Minister is going to face a challenge in November to his position as party leader, may I helpfully suggest that arrangements be made for the contenders to come to the House and explain why they want the job, and their alternative policies?

Mr. Newton: It is even more unusual for the hon. Gentleman to make a helpful suggestion, and he has certainly been true to form on this occasion. I think I shall leave his suggestion on the table.

Sir Teddy Taylor: In view of the alarming report agreed yesterday by the Employment Committee of the European Parliament, which stated that the convergence criteria would add another 10 million people to the unemployment total on the continent—on top of the appalling 20 million who are already on it—will my right hon. Friend guarantee that Ministers comment on the report on Wednesday? Will they also think about it and explain to the House whether this is not—coming as it does before the single currency—the kind of economic disaster that some of us think it is?

Mr. Newton: I can hardly guarantee the contents of other people's speeches, but I should be surprised if my right hon. Friends did not make some reference to the report.

Mr. D. N. Campbell-Savours: May I pre-empt the difficulties that, in my view, will inevitably arise in the new special Committee set up to implement the Nolan proposals, by asking again whether that Committee can meet in public and deliberate in public—a question that was raised last week during and after business questions? If we are to avoid the disputes that I expect to take place, why should we not hear the arguments in public? Surely that would at least enable us to achieve a resolution.

Mr. Newton: I shall not add much to what I said last week. It is clear that no Select Committee has ever deliberated in public; that is a centuries-old practice of the House, and if this Committee decided to deliberate in public, it would constitute a change going beyond what is expected of Select Committees.

Mr. Harold Elletson: Will my right hon. Friend find time for an urgent statement from the Foreign Office on the state of Anglo-French relations, following the French Government's decision to resume nuclear testing on the Muroroa atoll? Does he agree that that disgraceful decision, which has been roundly con-demned by environmentalists and Commonwealth Governments, may seriously undermine other countries' commitment to both the nuclear non-proliferation treaty and the comprehensive test ban treaty? Does he also agree that the decision underlines, once again, the utter foolishness of attempts to impose a common European foreign policy?

Mr. Newton: Obviously, we may have to take a second or two to understand the concern caused by the French decision; but we see no reason why a limited programme of tests need affect prospects for a successful negotiation of the comprehensive test ban treaty. At any rate, I can assure my hon. Friend that our policy on testing remains unchanged. We are actively working for a test ban treaty, and have said that we will not seek to test while the United States moratorium remains in force.

Mr. Tony Banks: May we have a debate on London soon, please?

Mr. Newton: I will think about it.

Mr. Andrew Rowe: Some months ago, the Labour-controlled council of Rochester-upon-Medway sent away the enthusiasts who are trying to restore a local theatre, saying that, if they raised £50,000, the council would give them an interest-free loan of £50,000. When they returned, having raised the money, the council shilly-shallied. May we have a debate, at this early stage of the council's existence, in order to teach it how to run itself?

Mr. Newton: There appear to be a large number of matters that the Leader of the Opposition ought to be investigating in relation to Labour-led local authorities.

Mr. Dennis Skinner: Will we hear a statement from the Prime Minister about the G7 meeting in Canada? Canada is a very funny place for the Prime Minister to visit, in view of what happened a few short months ago, when its Conservative party lost every seat bar two. What is the Prime Minister going to Canada for—to study election meltdown?

Mr. Newton: As I said at Prime Minister's questions, my right hon. Friend has gone to Canada to demonstrate how to run an extremely successful economy.

Mr. Iain Duncan Smith: Will my right hon. Friend find time for a proper debate to inform the public about the way in which policy is made by both Opposition and Government? I am particularly concerned about the fact that a policy that opposed grant-maintained schools in December moved towards doubt in January; by March, it seemed that the Opposition might accept a grant-maintained school system, and it now appears that they will.

Mr. Newton: I shall certainly take the matter into consideration. It is another addition to the long list of Labour "policies", in which the only policy appears to be confusion.

Mr. Bill Michie: Will the Leader of the House devote some Government time to the issue of the pay rise for the head of Ofgas, which is of great interest to the public? We are asked questions about it, and I think it only right for us to debate it.

Mr. Newton: I do not undertake to give time for such a debate. The Gas Bill is, of course, before Parliament at the moment. Indeed, that is part of the background to the matter, because the extra work, which will increase still further with the Government's plan to introduce more competition, is a factor in the decision.

Sir David Madel: I assume that the new Select Committee on the Nolan report will invite Lord Nolan himself to come and share his thoughts on why he reached his conclusions. On Lord Nolan's view that outside earnings from consultancies should be declared in full—my interest in the matter is properly declared in the Register of Members' Interests—would my right hon. Friend draw Lord Nolan's attention to the Data Protection Act 1984, which imposes a general duty of confidentiality between employer and employee and to the Companies Act 1985? [HON. MEMBERS: "Special pleading".] Not at all. We are all taxpayers in the House, and no different from the public. We should all be treated the same.

Mr. Newton: On the first half of my hon. Friend's question, as I told my hon. Friend the Member for Isle of Wight (Mr. Field), since the Committee has not yet met, I can hardly pre-empt the decisions that it might or might not take. On the latter point, I will, of course, draw his remarks to the attention of the Nolan Select Committee.

Mr. Mike Watson: The Leader of the House may be aware of early-day motion 1242, which refers to the campaign being led by the Glasgow Evening Times on the terrible drug problems facing that city.
[That this House congratulates the Glasgow Evening Times on its anti-drugs campaign, in particular the immediate success of the hotline enabling the public to expose the merchants of death on the city's streets; recognises that drug abuse is in large measure the result of appalling social conditions and the lack of jobs available for young people; and urges the Government to ensure that increased resources are made available to statutory and non-statutory organisations which help those affected, directly and indirectly, by drug abuse.]
However, he will certainly be aware of the similar problems that afflict every majority city throughout the United Kingdom. Will he do everything in his power to ensure that we have an opportunity to debate that serious matter before the summer recess?

Mr. Newton: We debated the Government's White Paper on drugs on Friday—I accept that it applies to England, but it parallels the Scottish document—and that would make it difficult to schedule another such debate before the summer recess.

Mr. Rupert Allason: Will my right hon. Friend arrange for my right hon. Friend the Secretary of State for Defence to make a statement on the publication of the air accident investigation branch report into the Chinook helicopter crash on Mull last year? Is he aware that, among the families of the people who died in that tragedy, there is widespread concern that compensation is likely to be limited to the terms of the Warsaw convention? That would not only be bad for the morale of all members of the security and intelligence services but also terribly unfair on the widows of those people, who devoted their lives to fighting terrorism.

Mr. Newton: The whole House would once again want to express its condolences to the widows and other family members of those who died, and I should like to do that in responding to my hon. Friend's question.
I should make it clear that the Ministry of Defence will be considering compensation claims in excess of the provisions of the Air Act Order 1967, which is another way of making the point that my hon. Friend raised. However, the amount of compensation is for discussion between the MOD and the next of kin or their representatives.

Ms Glenda Jackson: As, under Government rules, a French water company may submit a bid to provide rail services in south-west England, but, under the same rules, British Rail, the only company with the relevant experience and expertise, may not, will the Leader of the House find time next week for an urgent debate on what is clearly a deeply unpopular piece of legislation? That is highlighted by a recent national opinion poll, which showed that one in six Conservative voters will be reconsidering their votes because of that issue alone.

Mr. Newton: It seems to me that the interest of a French company in south-west trains is a demonstration of how wrong Opposition Members were to say that there would be no interest in the private sector franchises.

Mr. Harry Greenway: May we have a debate next week on local government finance, so that the House can consider the position of Ealing's Labour council, which put up service charges for those who bought their homes—a fat lot the Labour party cares about that—by 200 or 300 per cent. at a stroke two or three weeks ago? The House should know that that is costing my constituents £300 or £400 a year in some cases, and should take action against Ealing's Labour council accordingly.

Mr. Newton: I do not know whether my hon. Friend is on your obviously long list, Madam Speaker but if he is, I hope that he may get an opportunity to make that point in today's debate.

Mr. Harry Barnes: Is the Leader of the House aware of the letter from the Secretary of State for Northern Ireland to the chair of the Standing Advisory Commission on Human Rights in Belfast, which says that, if a Northern Ireland Member brought forward a Bill on abortion to clarify the law or to bring it into line with the British legislation of 1967, the Government would facilitate its progress through the House? As the Government believe in a United Kingdom Parliament, is that offer open to other hon. Members? Would such facilitation be extended to me if I introduced such a measure?

Mr. Newton: I think that I had better draw that request to the attention of my right hon. and learned Friend the Secretary of State for Northern Ireland.

Lady Olga Maitland: Will my right hon. Friend consider an urgent debate on grant-maintained schools? I ask because of the concern felt by parents in my constituency who have been reading reports that the Labour party is proposing to pack school governing bodies with elected councillors. That is socialism through the back door, and parents will not stand for it.

Mr. Newton: Once again, there is an urgent need for clarification of the Opposition's policy, and I hope we shall get it.

Mr. Andrew Miller: In a written answer on 17 May, the Government announced their intention to investigate the possible privatisation or scrapping of the Data Protection Registrar's office. Since the consultation period expires tomorrow—as I understand it, the Government have invited very few views—will the Leader of the House consider a debate on the subject, and ask his colleagues in the Home Office to extend the consultation period as a matter of urgency?

Mr. Newton: My right hon. and hon. Friends in the Home Office will be answering questions next Thursday; perhaps the hon. Gentleman might like to raise the matter with them then.

Mr. Peter Luff: Will my right hon. Friend find time for an early debate on the availability of pornographic material to children? I hope that he has had the opportunity to study the correspondence that I delivered to his office yesterday. It is correspondence that I have had with my constituent, Mr. Wilde, about the purchase by his 11-year-old daughter of a grossly obscene record which rejoices in the innocent name "(Don't Stop) Wiggle Wiggle" by the Outhere Brothers. Such filth suggests that the record industry is not policing its output effectively, and that there could be a need for further action by the Government.

Mr. Newton: I have indeed read the correspondence that my hon. Friend kindly gave me, and I fully understand his concern. He has written to my right hon. and noble Friend the Minister of State, Home Office, and I am sure that she will reply to him.

Mr. George Mudie: The Leader of the House will be aware that his reply to the hon. Member


for Hendon, South (Mr. Marshall) will be depressing for the families of the 3,000 haemophiliacs who caught hepatitis C from having contaminated blood through the national health service. Is he aware that a number of the 3,000 people affected are youngsters whose lives have been blighted? Will he use his considerable influence with the Secretary of State for Health to get a debate, or at the very least a ministerial statement, on this sensitive matter?

Mr. Newton: The hon. Gentleman will know that I have good cause to be aware of the difficulties and the problems for families affected in this way, as I held the relevant ministerial post when there was a similar problem in relation to AIDS. I shall, of course, draw the hon. Gentleman's request to the attention of my right hon. Friend the Secretary of State for Health.

Mr. Gyles Brandreth: Will my right hon. Friend find time for an urgent debate on policing policy? It would give the House an opportunity to congratulate the deputy chief constable of Cheshire on her unique appointment as chief constable of Lancashire, which is a proper recognition of the qualities of an outstanding police officer. It would also give us the opportunity to recognise good service when it is delivered, because crime in Cheshire is falling, detection rates are rising and front-line policing in Cheshire is improving, thanks to 195 additional police officers and special constables this year.

Mr. Newton: Everyone will want to congratulate Mrs. Clare on her appointment as chief constable of Lancashire. I hope that it will not have gone unnoticed by the Labour party that it has happened without an all-women selection list.

Mr. Jim Dowd: Will the Leader of the House find time for a debate on the role and responsibilities of Ministers, so that the House might further explore the thesis advanced by the President of the Board of Trade on Tuesday: that, although Ministers can come to the House and deal with individual Members proclaiming Government policies, they seem to have no responsibility for carrying them out?

Mr. Newton: I am sure that my right hon. Friend made no such suggestion, but, if the hon. Gentleman thinks he did, I have no doubt that my right hon. Friend will consider his words.

Mr. Nigel Evans: May I join the growing clamour for a debate on grant-maintained education? A number of schools in my constituency are currently grant-maintained, and the reason is that parents wanted to dislodge themselves from local authority control. The leadership of the National Union of Teachers has changed its mind, but the Labour party is hopelessly confused. A debate would give the Labour party the opportunity to focus its attention on coming up with a policy on grant-maintained education, so that the public will know where they stand.

Mr. Newton: I would add only to what I said earlier: that I am pleased to see that, in the NUT's survey of its members who work in GM schools, an overwhelming number supported GM status and believed that it had improved those schools. I hope that that will be taken into account by local authorities and by the Labour party.

Mr. Patrick McLoughlin: Will my right hon. Friend facilitate a debate as soon as possible on whether there was collusion between the Labour party and the BBC following the report on 5 June, on the "Today" programme regarding Sir Richard Scott's report? Is my right hon. Friend aware that the thesis of that report was a letter that my right hon. Friend the Prime Minister had written to the hon. Member for Livingston (Mr. Cook)? That letter was sent on 25 May, yet the BBC did not use it until 5 June—the same day that it used the leaked report of Sir Richard Scott, which, it emerged this morning, it had had for two to three weeks.

Mr. Newton: I am sure that my hon. Friend's question will be looked at carefully, both by my right hon. Friend the Secretary of State for National Heritage and, no doubt, by those at the BBC.

Mr. Richard Tracey: Will my right hon. Friend consider arranging an urgent debate on the policies of social correctness and social engineering, such as that imposed by the London borough of Islington, which led to such dire effects for the children of that borough?

Mr. Newton: I very much hope there will be an opportunity before too long to explore some of those matters in local authority affairs, many of them falling exactly under the heading of political correctness.

Remploy

Mr. Alistair Darling: On a point of order, Madam Speaker. The hon. Member for Bolton, North-East (Mr. Thurnham) has been good enough to draw to my attention a passage in a speech that he made yesterday morning in the House on a debate on Remploy, in which he said:
It has been suggested to me that Remploy could be transformed into an employee-owned trust. The hon. Member for Edinburgh, Central (Mr. Darling), the Opposition spokesman on finance and City affairs, spoke at the launch of the new Employee Share Ownership Trust, so there is interest on both sides of the House in considering a possible different structure for Remploy as an employee-owned trust."—[Official Report, 14 June 1995; Vol. 261, c. 713.]

I had no idea that the hon. Gentleman was going to make that speech and mention me, but at no time have I ever suggested any structure for Remploy. Indeed, the hon. Gentleman approached me in the Lobby some two days ago, asking about Remploy, and I specifically referred him to my colleague on the Front Bench who has responsibility for Remploy. It is perfectly true that we are in favour of employee-owned trusts, but we have never made any comments so far as Remploy is concerned.
I am quite prepared to accept that the hon. Member for Bolton, North-East inadvertently misled himself. I did look for him before I raised this matter, but it is important that the record is put right, because these proceedings are followed outside the House.

Madam Speaker: The hon. Member for Edinburgh, Central has taken time to do precisely that.

BILL PRESENTED

ENVIRONMENTAL CLAIMS

Mr. Alan Keen, supported by Mr. Peter Bottomley, Mr. Cynog Dafis, Mrs. Diana Maddock, Mr. David Nicholson, Mr. Alan Simpson, Mr. Matthew Taylor and Mr. Malcolm Wicks presented a Bill to prevent the making of false or unsupported environmental claims and similar claims related to animal welfare in relation to goods or services, and for purposes connected with those matters: And the same was read the First time; and ordered to be read a Second time upon 14 July, and to be printed. [Bill 134.]

Council Tax

Madam Speaker: We now come to the main motion of the day. I have had to limit speeches made by Back-Bench Members to 10 minutes.

The Secretary of State for the Environment (Mr. John Gummer): I beg to move,
That the draft Council Tax Limitation (England) (Maximum Amounts) Order 1995, which was laid before this House on 12th June, be approved.
It is the duty of any Government to balance genuine requirements for local services against the wider considerations of the level of public expenditure and taxation and the state of the economy as a whole. I recognise that this year's settlement is tight and that some authorities would have wished to have been able to spend more. That is perfectly understandable, but local authorities have to continue to take a rigorous approach to pay and efficiency and to make a realistic assessment of their spending priorities.
In the event, the great majority of authorities did set budgets that were within their cap. Only 10 did not. Those were South Yorkshire fire and civil defence authority; Barnsley, Newcastle and Sheffield metropolitan districts; the shire counties of Devon, Gloucestershire, Shropshire and Somerset; Norwich city council; and Lincolnshire police authority.

Mr. Patrick Thompson: My right hon. Friend referred to Norwich city council. Will he make it clear to my constituents that that council has had a fair deal as a result of the announcements and has increased money to spend? Will he confirm that council tax payers in my constituency are protected and will be excused from having to pay excessive bills that they would otherwise have had to pay?

Mr. Gummer: I am surprised at Norwich because it could have asked for special determination, to enable it to charge 80 per cent. of the cost of the ending of the temporary rule system. That would have saved the council more than £500,000, but it did not bother to take advantage of that. It is hard to understand how Norwich is in difficulties when it was not willing to ensure that it took the maximum opportunities. It had known for about 15 months that its present policies would end in it not being able to meet the proper requirements of the Government and council tax payers. It made that clear to my hon. Friend and officials some time ago. I shall come to the situation of Norwich in a moment.
I designated all the authorities that I have mentioned on 4 April and proposed for each of them a maximum amount or cap for its budget. The authorities then had 28 days in which to accept or challenge their caps. We listened carefully to the representations that were made by South Yorkshire fire and civil defence authority and by others, and accepted at the outset that the cap implied by the capping principles would not be achievable. Therefore, we proposed a cap at the same level as that proposed by the authority as its budget requirement. South Yorkshire fire and civil defence authority accepted that cap and is not included in the order.
The remaining nine authorities decided to challenge their proposed caps and suggested alternative maximum amounts. In each case they proposed as their alternative


their original budgets and submitted detailed papers setting out their case for a higher cap. My hon. Friends the Under-Secretary of State, the hon. Member for Hertfordshire, West (Mr. Jones) and the Minister for Local Government, Housing and Urban Regeneration met delegations from all the authorities to hear their case. Before taking my decisions, I carefully considered the points of all the authorities, including those made at the meetings, and the representations made by hon. Members and other interested parties.
Much time and effort has been spent to ensure that each authority has had a full opportunity to put its case to us in an effective fashion and that we properly understood the points and figures that they put to us. In assessing the impact of our decisions, we relied, of course, very largely on the local authorities' own figures and estimates. Of course, it is bound to be true that, in presenting a case, local authorities will put those figures in the most effective way. The cases presented by the four shire counties focus primarily on their concerns about the impact on school budgets and, in the case of Gloucestershire and Shropshire, on social services.

Mr. Roger Knapman: Is it the case that Gloucestershire county council has acknowledged that, even if it was capped at the present level, there would be no need for cuts in school budgets? If that is the case, the Liberal and Labour parties in that county have been running an absolutely disgraceful campaign using individual schools and the pupils in them as political pawns.

Mr. Gummer: In its submission to me, Gloucestershire county council clearly said that school budgets were not cut in cash terms. Therefore, if any school in Gloucestershire finds to the contrary, it must immediately get in touch with its local authority, which has made the position quite clear. It is necessary for Gloucestershire county council to explain if that is not the position. My hon. Friend will want to make that point clearly. There is no doubt that in Gloucestershire there has been a great deal of party politicking by the Liberal-Labour alliance that runs that unfortunate county.

Mr. Nigel Jones: I am listening with great interest to the Secretary of State. He does not seem to have taken into account the pay award for teachers. School budgets have not been cut in cash terms, but the pay award has a significant effect on those budgets. Does he not realise that the budget that was proposed by Gloucestershire county council was a joint Liberal Democrat-Conservative proposal? The Labour party wanted to set a much higher budget. It was proposed by John Sewell, the leader of the Liberal Democrats on the council, and seconded by Richard Izett, the leader of the Conservatives on the council.

Mr. Gummer: The hon. Gentleman's point does not detract from the fact that, all around Gloucestershire, individual schools are finding that Gloucestershire county council has failed to meet its own demands. It said that there would be no cut in cash terms, but schools are finding that they are getting a cut in cash terms. That is because the council must be using the money that it said was going to schools in some other way, and it is blaming the Government for that.

Mr. Paul Marland: Will my right hon. Friend give way?

Mr. Gummer: No. I must answer the hon. Member for Cheltenham (Mr. Jones). On the payment of schoolteachers, the fact of the matter is that Gloucestershire county council knew perfectly well that it was necessary to restrain expenditure. It was able to have an increase in what it was spending over last year, but it has not delivered in the way in which it claimed it would be able to deliver. It has the means to find ways of spending money more efficiently and effectively. What is more, schools in Gloucestershire have significantly large balances—about £5 million, or 7 per cent., of the direct schools budget is in balances. That puts those schools in an especially favourable position.

Mr. Geoffrey Clifton-Brown: Is my right hon. Friend aware that Gloucestershire county council has inspired a campaign giving out all the fax numbers of Gloucestershire Members of Parliament, and that my floor is about half an inch thick with faxes from angry parents? It is a disgrace for the county council to blame Members of Parliament when it has cut individual school budgets by between 4 and 7 per cent. Will he clearly explain why Gloucestershire's appeal was not allowed, yet Somerset's appeal was?

Mr. Gummer: Gloucestershire county council had every opportunity to come and explain why it was not able to live within the same sort of restrictions within which most other counties lived. When it came to do so, I am afraid that it did not put up a convincing case. Somerset was able to show that, in the particular circumstances concerned, it would have had to cut its school budgets in cash terms, but Gloucestershire county council admitted from the beginning that it did not have to. Having admitted that it had the money to deliver a reasonable solution, Gloucestershire is now claiming something wholly different, to try to blame the Government for what is its own fault.
My hon. Friend is right: Gloucestershire is running a party political operation to excuse its own incompetence. Like everyone else, it had every opportunity to put its case. I am afraid that it failed to do so because its case was not very good.
I have therefore concluded that the cap for Somerset should be £264.920 million, an increase of £2.6 million above the original cap. In reaching that conclusion, I took into account the authority's overall financial position and the particularly severe impact that a budget cap would have had on school budgets in Somerset.
I considered carefully the cases put to me by Devon, Gloucestershire and Shropshire.

Mr. Patrick Nicholls: In the context of the meetings and conversations that I have had in recent days with my right hon. Friend, he will know that people in the west country are worried that there may be a disparity of treatment between Somerset and Devon. May I remind him in particular of a letter that was sent to me by John Garnett of Exmouth community college? He believes that there has been inequality in the way in which the two counties have been treated. Will my right hon. Friend deal with that point specifically, so that people in Devon will understand just how disgracefully Devon county council has behaved?

Mr. Gummer: The fact is that Devon could increase its schools budget by 1.2 per cent.

Mr. David Jamieson: How?

Mr. Gummer: It has the money to do so, largely provided by the taxpayer. Somerset would have had to cut its budget by 3.5 per cent. The difference is that Devon was in a position to spend something more than three times as much as Somerset. The difference between the two is about three times. Therefore, Somerset clearly had a much better case.
In order to cover up that difference, Devon county council has produced a series of—if I dare say it in the House—untruthful figures. For example, in order to pretend that it has been done down, instead of talking about spending per pupil, it wanted to use spending per head of the population in its figures and bring all the adults into its school population. Only in that way could it produce the figures.
When Devon came to compare administration costs, it included redundancy in the Somerset figures and left redundancy out of its own figures to show how much better it supposedly was on administration. I am afraid that a county that has to mislead its electorate shows by its own words that its case is extremely poor. Its case did not stand up under close consideration by myself and my officials when the council came to see us.

Mr. Marland: I should like to help out with Gloucestershire. My right hon. Friend is right when he says that part of the trouble in Gloucestershire is the historic overspending. That is the problem, as the hon. Member for Cheltenham (Mr. Jones) knows full well. The council went on a spending spree when the hon. Gentleman was on the county council and ran up a deficit of more than £120 million. The third largest item on the council's budget is now debt servicing. The first item is education, the second is social services and the third is debt servicing. Historic overspending by Gloucestershire county council is the problem.
May I tell my right hon. Friend that I and other Gloucestershire Members of Parliament are sick and tired of being the whipping boys for Liberal and Labour overspending on Gloucestershire county council? Does he agree that it is time now to start looking at the possibility of raising the cap in order that the guilty men can be exposed and the blame can be laid where it truly should be—at the door of the Liberal and Labour—

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse): Order. The House is aware that Madam Speaker has placed a 10-minute limit on speeches after the Front-Bench speeches. We are getting close to 10-minute interventions.

Mr. Gummer: The fact of the matter is that the Liberal-Labour hangover in Gloucestershire is a very serious worry. The Liberal party is a spendthrift party. It has a technique. It is to spend the money and then complain when there is none left and blame the Government. I agree with my hon. Friend that there is a great temptation to say that it should stew in its own juice and should have to charge the public with the sums that are the result of its misapplication of funds, its wastage and its inability to control funds when the whole of the rest of the public sector must do so. I was surprised that the hon. Member for Cheltenham (Mr. Jones) intervened. Everyone in the House knows where the fault lies in Gloucestershire. It lies in the inability of the Liberals not

to spend money on anything that happens to be around and then to blame everyone else when they find that that is costly.

Mr. Nigel Jones: Will the Secretary of State give way?

Mr. Gummer: No, I will not give way. I have given way once to the hon. Gentleman. One time is enough for him. If I give way again, he might put his foot in it a second time. He is wrong in what he says. If Gloucestershire county council under Lib-Lab control, but particularly under the Liberals, had been less spendthrift in the past, it could have done better now. It must not blame the Government for its attempt to pinch money from the taxpayer generally to make up for its past spending. It is time that the people of Gloucestershire knew that rather than just hearing the carefully phrased clauses of the hon. Member for Cheltenham.

Mr. Richard Tracey: Although I am not involved in the affairs of Gloucestershire, it seems very clear that there is confusion, whether in Gloucestershire, Devon or, indeed, in matters relating to the London boroughs, of which I certainly have some knowledge. May I suggest that, to avoid such confusion, the Government ought to consider lifting the policy of capping? In all seriousness, the public do not understand all the complexities and those guilty men should be seen to be responsible.

Mr. Gummer: My hon. Friend makes an important point. We shall—as always—be looking at the issue again this year. He must consider the other side of the argument. When we did not have capping, those guilty men made ordinary people's lives intolerable by increases in council tax. Although the sort of increases demanded in towns such as Harlow and boroughs such as Ealing—I declare an interest because I live in Ealing during the week—showed them to be the kind of councils that they were and they reaped electoral disbenefit afterwards, ordinary people were faced with bills that were extremely hard to pay. So there is a balance to be struck.

Mr. Mark Robinson: I would not want to draw comparisons with other counties, but once we got under the Liberal Democrat rhetoric in Somerset, we realised that a case for the schools of Somerset needed to be heard. That is why we supported the case for the cap to be raised in Somerset. That at least shows that the appeal system works fairly and properly, that cases are considered and that some win and some are not successful.

Mr. Gummer: My hon. Friend points to the fact that hon. Members have every right and duty to look behind the figures produced by their councils—even if they are produced by councils with which they do not agree—to see whether there is some basis for them. In the case, for example, of Somerset, there is no doubt that, despite the relaxation in the cap, Somerset is in a much less favourable position with regard to school budgets than Devon. Devon is in a better position even after the raising of the cap.

Mr. Nick Harvey: How?

Mr. Gummer: The hon. Gentleman does not know how because he does not understand the system. Like so many members of his party, he just shouts out parroted comments while not understanding what he is talking


about. The truth is—I shall put it very clearly—that Devon is able to increase its schools budget by 1.2 per cent., whereas even after the cap has been raised in Somerset, Somerset can increase its schools budget by only 0.1 per cent. Therefore, my facts are clear.

Mr. Harvey: Will the right hon. Gentleman give way?

Mr. Anthony Steen: Will my right hon. Friend give way?

Mr. Gummer: I shall give way to my hon. Friend.

Mr. Steen: Is my right hon. Friend aware that most Members who represent Devon have been subject to a most vitriolic campaign involving students, young people, parents and educationists, who have been saying that because of the county cuts, hundreds of teachers will have to be laid off? Does my right hon. Friend agree that, to use a good agricultural phrase, the people of Devon have had the wool pulled over their eyes—or have Members of Parliament had the wool pulled over their eyes?

Mr. Gummer: It is about time that people in Devon recognised that, over the past two years, Devon has been able to increase its schools budget by 8 per cent. What is more, that has been possible while the county council has chosen to give greater priority to social services, the budget for which this year has risen by 3.6 per cent. That county council has chosen social services as its priority and increased that budget rather than the spending on education. It is still able to do better for education than its neighbours, yet it is blaming the Government for the fact that its competence has meant that that money has not got through to the schools concerned.

Mr. Rupert Allason: As my right hon. Friend has made a comparison in terms of expenditure per pupil, will he make that comparison between Somerset and Devon? That would be comparing like with like, rather than comparing apples with oranges.

Mr. Gummer: I can give my hon. Friend a detailed note, which will be available to any Member of the House, showing the difference between the case put forward by Devon and the truth of that case. My hon. Friend will be able to see the details exactly compared, and I am sure that he will want to use the information widely.

Mr. Patrick McLoughlin: My right hon. Friend is right to talk about the great confusion surrounding local government expenditure. Central Government now account for about 90 per cent. of local authority expenditure, so will my right hon. Friend and his colleagues consider as a matter of urgency whether in future years a leaflet should be sent by the Secretary of State to every council tax payer explaining how much money the Government have given the person's local council, compared with the sums given to other councils? It is a nightmare trying to understand all those budgets.

Several hon. Members: rose—

Mr. Deputy Speaker: Order. That is the end of long interventions. I shall interrupt any further long interventions and stop them, because interventions must be brief and to the point.

Mr. Gummer: I am happy to tell my hon. Friend that we are now producing performance indicators that will enable people to see easily the difference in the quality of

provision between one county or district and another. The performance indicators are simple to understand, and one of the facts that emerges clearly is the incompetence of Derbyshire county council, which, as I have said in the past, is and has been for many years one of the worst councils in Britain.

Mr. Harvey: The Secretary of State says that Devon could spend more on its education budget. Will he confirm that Devon is already spending more than its standard spending assessment on education? He says that social services is one of the departments that the money might come from, but what account has he taken of the fact that Devon was the hardest-hit shire county when the funding for community care was reorganised last year? Where is the money that the right hon. Gentleman proposes should be spent on education supposed to come from?

Mr. Gummer: I have explained to the hon. Gentleman that, despite having decided to put more money into social services, Devon has still been able to increase its education budget by 8 per cent. over the past two years. If schools are not receiving the money that they hoped for, it is because Devon county council has not operated efficiently and effectively. It could deliver the money, but only if it were not run by people who do not understand how to be efficient. The hon. Gentleman does his county no good by standing up for the inefficiency of those who rule it instead of for those who ought to be getting a better service. He should intervene and press his friends who are getting it all wrong, instead of constantly trying to pass the buck.
The hon. Gentleman must realise that power demands responsibility, and it is not responsible to attack the Government for the faults of his Liberal Democrat friends. He ought to learn that fact, but he will not have long to learn it, as the Liberal Democrats will be turfed out at the next election because of the appalling way in which they have behaved. He should realise that his area is one of the places where the Conservatives will make gains at the next election, because the people have been shown what it is like to have their councils run by Liberal Democrats.
I shall now deal with the metropolitan districts of Barnsley, Newcastle and Sheffield, all of which made cases for redetermination. I have concluded that the cap for Barnsley should be £152.626 million—a relaxation of £2 million, but about £1 million less than Barnsley proposed. In reaching that conclusion, I took into account all the factors relevant to Barnsley's case, including the area's economic and social difficulties, which have been exacerbated by large-scale closures in local industries, and the special problem of education standards in the area.
I carefully considered the cases made by Newcastle and Sheffield. Sheffield was given a relaxation of £3 million in its cap last year, to give it time to adjust to a change in its circumstances. The benefit of that relaxation will be carried forward into the current year. In addition, the figures that Sheffield gave to me show that it has budgeted for significant savings in its financing costs in the current year. In consequence, the budgeting position for main services such as education and social services has eased sufficiently to enable the council to increase its expenditure compared with 1994–95.
On the figures that Newcastle has put to me, it can be seen that that council will be able to budget for modest increases in expenditure in main services such as


education and social services. I have concluded that, by taking into account the overall financial situation and circumstances, it would be reasonable to confirm the original capping limits for both Sheffield and Newcastle.

Mr. Clive Betts: Will the Secretary of State confirm that, despite what he has said, the capping limit that he is intending to impose this year is lower in real terms than the initial cap for last year, which he decided was inadequate and later increased by £3 million?

Mr. Gummer: The hon. Gentleman did not mention to the House that Sheffield budgeted for a saving of £20 million on its financing costs, or that it will also benefit from the £13.5 million of savings that it achieved last year. Sheffield was given help last year because of its financing costs, much of which existed because of the hon. Gentleman's period in office in the city. The ordinary council tax payer in Sheffield is paying for the overspending of many years.
If the council tax payers of Sheffield want to know why their bills are so high, they must ask the hon. Gentleman and the hon. Member for Sheffield, Brightside (Mr. Blunkett). It was during their stewardship that the burden of debt was put on the shoulders of the people of Sheffield. The hon. Gentleman wants me to take the burden that he placed on the shoulders of the people of Sheffield and move it on to everybody else's shoulders. He wants the debt to be passed on to the shoulders of people who have been looked after by prudent Conservative authorities. I must tell the hon. Gentleman that I will not do that.
It is time that the people of Sheffield recognised that the prudent policies of the Government have brought reductions in the financing costs. The financing costs have come down because an economy with low inflation rates, and therefore low interest rates, enables the costs of past profligacy to be less than they would otherwise be. I am sure that, given the facts, the people of Sheffield would recognise that the hon. Gentleman has only one part to play in the House—to apologise for the extent to which the local council wasted the money of the people of Sheffield in the past.

Mr. Jim Cousins: Will the Secretary of State explain why the cap that he has set for Newcastle will not allow Newcastle to spend the money that he actually wants to give it through the SSA?

Mr. Gummer: If one looks at what Newcastle did to the council tax last year, one sees precisely that the council took from the people of Newcastle more than it should have. Am I supposed to say to the people of Newcastle that we shall protect everybody else but them in these circumstances? [HoN. MEMBERS: "Yes."] Many of my hon. Friends would prefer it if we did not give protection, and if we allowed the Labour and Liberal parties to show the electorate precisely how expensive they are. That is a view which I respect. The hon. Member for Newcastle upon Tyne, Central (Mr. Cousins) cannot have it both ways. Under the present system, there is no

doubt that our purpose is to make sure that the people of Newcastle do not pay the full penalty for having voted Labour.

Sir Irvine Patrick: Will my right hon. Friend pay tribute to the steps that Sheffield has now taken to get itself out of the financial mire? Those steps include a huge reduction in the number of staff. May I say that I am grateful for two things that the Government have done? The first was the help that they gave the fire and civil defence authority, and the second was the help that they gave Sheffield last year.

Mr. Gummer: My hon. Friend is perfectly right, and I pay tribute to Sheffield for what it has done. We gave Sheffield that breathing space because it has at long last—after the demise of the two hon. Gentlemen whom I mentioned—begun a management plan to face the issues of the debts that have been placed on the people of Sheffield. We gave Sheffield that help in respect of that plan and it continues this year. I am sure that that was the right thing to do.
Lincolnshire police authority was the only police authority to seek an increase in the capping limit. My right hon. and learned Friend the Secretary of State for the Home Department and I accept that the transition to a new cash-limited financial regime in 1995–96 has created particular difficulties for the authority. We have decided to agree to the budget proposed by the authority—a relaxation of £1.8 million. I must stress, however, that that relaxation is intended as a one-off adjustment, to enable the authority to adjust to the new financial regime and to give it the time that it needs to plan and implement the savings of about £1 million that Her Majesty's inspectorate of constabulary has identified as achievable through improved management efficiency.
This year, it is for Lincolnshire to do what Sheffield was asked to do last year. It must take advantage of the temporary help that has been given, to ensure that a situation that it ought to be able to put right, is put right.

Sir Peter Tapsell: First, may I say how exceedingly grateful everyone in Lincolnshire, including my constituents, is for the decision that my right hon. Friend has taken? We all feel, irrespective of party, that the Lincolnshire police are an extremely efficient organisation and, unlike Sheffield, there is no background history of profligacy or inefficiency. While I fully understand my right hon. Friend's argument about next year, will he also bear it in mind that, in the weeks ahead, we shall be explaining to him that the formula for deciding police authority grants is not appropriate to Lincolnshire for a variety of reasons?

Mr. Gummer: I certainly would be happy to discuss with my hon. Friend his views on the formula and I know that my right hon. and learned Friend the Home Secretary will be happy to do the same. One needs an objective scheme to share out money in central funds if the taxpayers' interests are, in fairness, to be protected, and my hon. Friend will understand that one problem with any formula is that those who benefit tend to be quiet but not very grateful and those who find it difficult want a different formula. I shall be happy to look into the matter. Of course, it is the first year of full operation and my hon. Friend may well have some points that we shall be able to take on board.
Norwich city council was the only one of 294 districts that did not set a budget at the level implied by the capping principles. It has known for some time that its spending relied on an unsustainable rundown of reserves. It has taken some steps to moderate spending, but nevertheless could have done more to adjust its budget and avoid the necessity of late change. The council chose not to do so. I considered carefully the council's representations, but concluded that the cap that we propose is reasonable and achievable, and should be confirmed.
If the order is approved by the House, we shall serve a statutory notice on all nine authorities, formally setting their cap. With the exception of Somerset and Lincolnshire police authority, the capped authorities will have 21 days to reduce budgets in line with their cap and to set new, lower council taxes.
I conclude by reminding the House of the long period of consultation that underlies our decisions on capping. Our intentions for the capping principles were published with the rest of the draft settlement in early December and again at the time of the local government finance debate in February. At each stage, we have listened to the arguments put to us. In February, the provisional capping principles were amended to relax caps for authorities that had been affected by major reductions in standard spending assessments in the 1993 review and to allow greater increases for metropolitan fire and civil defence authorities.
In April, when we confirmed the principles and designated authorities for capping, we accepted the particular problems of South Yorkshire fire and civil defence authority, and I am grateful to my hon. Friend the Member for Sheffield, Hallam (Sir I. Patnick) for his thanks on that subject. We therefore set the cap at the budget that the authority proposed. We now propose relaxations for a further three authorities.
That record shows that we have taken the greatest care to implement what was certainly a tough settlement as fairly as was practicable, and that we are prepared to make adjustments when there are especially severe problems. As my right hon. and hon. Friends will no doubt have noticed, however, that means that it is important to make the distinctions, in their counties and districts, between those that have been put in a position that it is difficult for them to meet because of the nature of the system and those that wished to blame central Government for the consequences of their own actions as county councils. County councils that have failed to deliver what their electorate expected must take the responsibility. The hon. Member for Cheltenham, who is no longer in the Chamber, has been trying to press the Government to take the blame instead of the local authority that he sought to control and now does control. He ought to take his own responsibility.

Mr. Robert Ainsworth: On a point of order, Mr. Deputy Speaker. This is the second time that I have raised a point of order with regard to this Secretary of State. Madam Speaker announced that it was necessary to impose a 10-minute limit on all Back-Bench Members' speeches and there are guidelines for Front-Bench spokesmen, yet we seem to have a continuing problem with the right hon. Gentleman, who has been wasting the time of the House and thus preventing other hon. Members from speaking.

Mr. Deputy Speaker: There may be guidelines, but as the hon. Gentleman will be aware, it is for the Secretary of State to deliver his own speech.

Mr. Gummer: I must point out that I have taken about 18 interventions and that my speech is extremely short. I had to answer those questions and I hope that the answers will save time for many hon. Members who need to speak. I understand that some people do not want to hear the facts of what happens when local councils are run by Labour and Liberal authorities.
Authorities whose caps have not been relaxed will be disappointed. I reiterate that we have not taken the decisions lightly, but have considered all aspects of the authorities' overall situation and listened carefully to the arguments put to us. We have changed the figures for a number of authorities—authorities whose policies we might not agree with, but which have been able to put a proper case that has been clearly acceptable within the rules. We concluded that the cases that they put to us provided a sufficient base for relaxing their caps, while others provided an insufficient base.
It is a tight settlement, but the great majority of authorities have been prepared to take tough decisions to set budgets within their caps. The caps that we have proposed in the order are reasonable, appropriate and achievable in all the circumstances of each authority. They will save council tax payers in the relevant areas about £24 million in 1995–96 alone. I commend the order to the House.

Mr. Frank Dobson: I must welcome three and a half aspects of the Secretary of State's speech. We welcome his acceptance—it was really forced on him by the Home Office, which supported the authority—that South Yorkshire fire and civil defence authority would have been endangering people if it had stuck to the cap that the Department originally envisaged. We also welcome the decision to allow Lincolnshire police authority to spend what it thinks necessary to police Lincolnshire, and I suppose that we should welcome the result of the Somerset SOS—save our seats—campaign from the local Tories.
To some extent, we should welcome the relaxation of the cap for Barnsley, but the order will mean further budget reductions of about £2 million in Norwich, £2.25 million in Newcastle, £4.5 million in Sheffield, £4 million in Gloucestershire, £4.5 million in Devon and £6 million in Shropshire. That is what the Secretary of State, not the people of those areas, has decided. In a sense it is appropriate that the Secretary of State should take those decisions, because he took the decisions that set the spending levels in the first place. The principal influence on the amount of money that a council can spend and that it must raise through council tax is the amount of grant that it gets from the Government. That amount was never adequate when it was first announced in November last year; we said that it would not match the rate of inflation, or what was likely to be the teachers' pay settlement then, and it has not done so. Consequently, councils are in trouble. It was a political racket then and it remains a political racket. It is not the product of some objective or God-given formula; it has been put together by politicians with a political purpose, the main object being to make everyone else suffer so that their friends in Westminster will be okay.
The capping system cannot be fair because it is the ultimate expression of a totally unfair system. The basic building block of the grants system is the Government's official indicators of need. An examination of the indicators shows that the system is rotten to the core because the Government regard Westminster as the fourth most deprived place in Britain. Nobody in his or her right mind believes that, not even the people who run Westminster city council, but as a result of it Westminster gets massive grants.
Let us compare the amount of grant per head that Westminster receives with the amount received by the capped authorities. If Norwich were to receive the same grant per head as Westminster, it would not collect any council tax this year but would give every council tax payer in Norwich a rebate of £816. In Barnsley, the rebate would be £867 per head, in Sheffield £588 and in Newcastle £293.
The same calculations could not be made for the counties because the financing is done differently, but I shall give some examples from the districts affected by the county decision. In Gloucestershire, for example, if each citizen of the city of Gloucester received the same Government help as those in Westminster, Gloucester city council could make rebates of £921 per head and the Forest of Dean council could make rebates of £685. In Devon, Plymouth city council could pay out no less than £992 per head, and Exeter city council could pay out £789 per head. In Shropshire, the Wrekin council could pay £777 per head.
It is not as though Westminster city council were the epitome of efficiency and financial prudence.

The Minister for Local Government, Housing and Urban Regeneration (Mr. David Curry): If the hon. Gentleman were reorganising the standard spending assessment system to achieve the outcome that he would like for Westminster, what would be the implication for the cuts in rate support grant for Tower Hamlets, Lambeth, Southwark and the other inner-city, Labour-controlled authorities?

Mr. Dobson: I had always assumed that the Minister was in his right mind, but if he seeks to compare Tower Hamlets and the other boroughs that he mentioned to Westminster, he has clearly taken leave of his senses—[Interruption.] The Secretary of State made an enormously long speech. If he will keep quiet, I shall get on with mine and hon. Members will be able to speak up for the communities that they represent.

Mr. Curry: The hon. Gentleman knows that there is a connection between those authorities and Westminster city council because they are encompassed by exactly the same methods of calculation. Therefore, if the hon. Gentleman were to seek to re-engineer the SSA system to achieve the deliberate outcome of cutting grants to Westminster, the necessary consequences would be reductions in grants to Tower Hamlets, Lambeth, Southwark and the other inner-city London authorities, unless he were deliberately to rig the system.

Mr. Dobson: If the Minister wants to talk about deliberate rigging of the system, perhaps he should explain to Tory Members who voted for this settlement

that Westminster city council receives a special allowance, for which virtually no one else in the country qualifies—that is why it was invented—for visitors to Westminster.

Mr. Curry: Anybody is entitled to it.

Mr. Dobson: Yes, just as anyone can eat at the Ritz. Anyone is entitled to the grant, but the grant is especially useful to Westminster.
Many visitors arrive in Westminster in cars and pay parking charges. Westminster city council receives more than £20 million a year in parking charges, which is not offset against any aspect of its grant. It is a racket, it has always been a racket and it will remain a racket so long as the Government are in office.
It is a racket that protects over-spenders in Westminster. The capped authorities spend much less on refuse collection: Newcastle spends £25 per head, Norwich spends £11 per head and Sheffield spends £14 per head. However, the Tories' over-subsidised fat-cat Westminster city council pays out no less than £53 per head on refuse collection. On street cleaning, Newcastle spends £8 per head, Norwich spends £5 per head and Sheffield spends £5 per head. Those councils have been capped so that Westminster, profligate as it is, can spend £36 per head on street cleaning. It beats me why Tory Members from Shropshire, Gloucestershire, Devon, Norwich and Sheffield are willing to go along with that racket, which lines the pockets of a few people in Westminster and does no good for the people whom they purport to represent.
I shall compare the allowance made in the grant for education for the capped authorities with that made for Westminster. If Devon county council were to receive the same education allowance as Westminster, it could employ 2,566 extra teachers this year rather than think about getting rid of teachers. Gloucestershire could employ 1,618 extra teachers, Shropshire could employ 996 extra teachers, Sheffield could employ 892 extra teachers, Newcastle could employ 371 extra teachers and Barnsley could employ 451 extra teachers. I cannot understand why Tory Members voted for a settlement like that. It must be said, however, that that is the basic background to this decision. If something is rotten to the core, the final product—the capping—is also bound to be rotten.

Mr. Tracey: I have been interested to hear the hon. Gentleman constantly talk about Westminster. As he mentioned foreign visitors, will he say how many foreign visitors go to Newcastle, Sheffield, Manchester or the outer London boroughs, one of which I represent? The House should also know the total external grant that a Labour Government would give.

Mr. Dobson: The hon. Gentleman, who does not seem to rank among the star wranglers of the play, confirms my point. There is a grant for visitors because it suits Westminster and it is no use to virtually everyone else in the country. That is why the Government conceived it in the first place.
The decisions on the capping criteria do not make sense either. When the settlement was announced, the Secretary of State chided me, saying that I was new to the job, had misunderstood the figures and had not done my


homework. I had the audacity to predict that the average increase in council tax would be 6 per cent. as a result of the settlement.

Sir Irvine Patnick: On a point of order, Mr. Deputy Speaker. The hon. Gentleman accuses me, as a Sheffield Tory Member, but appears not to hear when I seek to intervene.

Mr. Deputy Speaker: Order. The hon. Gentleman's point of order is an abuse of the House. He is an experienced Member, not least in the Whips Office, and knows full well the procedures of the House. What he has to say is a matter for his own speech or an intervention if the hon. Member for Holborn and St. Pancras (Mr. Dobson) gives way.

Mr. Dobson: As I was saying before I was so politely interrupted, the Secretary of State said that I misunderstood the figures and had not done my homework, but I predicted that the average council tax increase across the country would be 6 per cent. I freely confess that I was wrong; it was 5.2 per cent.
I plead in justification, however, that in Suffolk, Coastal, represented by the Secretary of State—I use the band D figure, because that is his favourite method—the increase was 6 per cent. It was 8.5 per cent. in Huntingdon, represented by the Prime Minister. It was 7.4 per cent. in the area represented by the Secretary of State for Education and, in the area represented by the chairman of the Conservative party, the right hon. Member for Richmond and Barnes (Mr. Hanley), it was actually 15 per cent.
If we then compare—[Interruption.] The Secretary of State made a long speech. Let me finish my argument. If we compare the increases in those places with the increases in the places that are to be capped, what do we find? We find that, if Barnsley had had its way, it would have been 12 per cent. In Devon, there would have been no increase, allowing for the police. In Gloucester, there would have been no increase, allowing for the police. In Shropshire, it would have been 12 per cent. and in Sheffield 13 per cent.
Staggeringly, if Newcastle city council had had its way, it would have reduced its council tax by 5.6 per cent., but it gets capped. It is a fiddle and a farce. If the Secretary of State wants to confirm that, he is welcome to do so.

Mr. Gummer: Did the hon. Gentleman notice that all those constituencies held by Conservatives can attribute the increase in the council tax to the Liberal-Labour county councils under which we labour? Will he explain why, when the Labour party was in power, Westminster did significantly better by comparison than it now does. If he is saying that there is something wrong with the present system, it is surprising that Westminster fares worse under the system that was introduced with the support of his hon. Friend the Member for Blackburn (Mr. Straw).

Mr. Dobson: I am not entirely sure that my hon. Friend the Member for Blackburn (Mr. Straw) was a Minister of the Crown in the most recent Labour Government. [Interruption.] Oh God, he was a special adviser, so it must be his fault. If we are talking about special advisers, this is the Secretary of State whose special adviser did a bunk on the night of the local elections. One can understand why.
Who does the Secretary of State believe that he represents? As I understand it, in Barnsley, Gloucestershire, Newcastle, Shropshire and Sheffield, all the parties on the council supported the budget and supported the representations asking to be allowed to go through the cap.

Mr. Patrick Thompson: The hon. Gentleman was talking about his forecasts of the increase in the council tax, and I genuinely want to know what the figure would have been for Norwich. Will he confirm that Norwich's citizens will receive a rebate as a result of the action that the Secretary of State is taking tonight?

Mr. Dobson: The hon. Gentleman will no doubt attempt to catch your eye, Mr. Deputy Speaker, and will tell us what horrors would have befallen the people of Norwich if the Secretary of State had not intervened.
It is not confined to members of the council. Shropshire Tory Members of Parliament, as I understand it, have made representations to the Secretary of State, saying, "Look after the old folks; look after the children in Shropshire". In Devon, one or two Members of Parliament certainly did that. They are not here, but one or two of them certainly started making public representations and then, apparently, changed their minds. The circumstances had not changed; they had simply changed their minds.
There appears to be public opposition from Tories in Gloucestershire, but I have been told by people from Gloucestershire that they have been led to believe by some of their Conservative Members of Parliament that they are making private representations, so I do not really know where we are.
Those matters were material to the local elections in all those places. The Tories had every opportunity—the right hon. Member for Richmond and Barnes could have raised the subject time and again at his press conferences—to say whether the councils should go through the cap.
What happened? The Tories lost half their seats in Barnsley; they now have one out of 66. They lost half their seats in Sheffield; they have four out of 87. They lost more than half their seats in Newcastle, where they have two out of 78, and they lost half their seats in Norwich, where they have one out of 48.
The Tories also made the issue a topic of the district elections in the counties concerned. In Devon, they lost 64 seats, in Gloucestershire they lost 20 seats and in Shropshire they lost 35 seats. Local people will express some concern that in—

Mr. Nigel Jones: Will the hon. Gentleman give way?

Mr. Dobson: I shall in a moment.
The people of Devon will be uneasy that the hon. Members for Exeter (Sir J. Hannam), for Plymouth, Sutton (Mr. Streeter), for South Hams (Mr. Steen), for Teignbridge (Mr. Nicholls), for Tiverton (Mrs. Browning), for Torbay (Mr. Allason) and for Torridge and Devon, West (Miss Nicholson) all voted for that rotten settlement.
People in Gloucestershire will be uneasy that the hon. Members for Cirencester and Tewkesbury (Mr. Clifton-Brown), for Gloucester (Mr. French), for Stroud (Mr. Knapman) and for Gloucestershire, West (Mr. Marland) also voted for that rotten settlement.
As we all know, the biggest impact of the settlement, with the exception of Norwich, is the threat to education and social services. It is having the same results throughout the country. Parents, governors and teachers are in revolt about the threat to their children's education. The Government have tried their desperate best to blame the authorities. They have failed in that effort, because people understand that it all depends on that rotten, rigged grant system.
I do not know whether the leaks came from the Education Secretary, who is trying to prove that she is friendly towards education, but shall we say that the newspapers gathered and then received a memorandum, which showed that the Education Secretary believed that the settlement was harmful to schools. She has been going round sweethearting teachers and other organisations, saying, "I am sticking up for you", but she has not done it sufficiently well to ensure that the caps are reduced.
The budget for Gloucestershire is the same as last year, and Gloucestershire is finding it necessary to abandon schemes to provide new centres for people with mental health problems in Newent in the Forest of Dean and in Gloucestershire. There are cuts because of massive cuts in the Government's community care grant. The council is getting fewer hours from 850 home care assistants who used to help people in desperate need in their homes so that they did not need any residential care. Some of those home care assistants have had their hours reduced by 50 per cent. because the county cannot afford to pay them. That, I gather, is being challenged in the courts.
Devon county council suffered the largest reduction in community care grant of any county in the country. It is being forced to contemplate redundancies in the education department, including teacher redundancies. Spending on pupils has, I understand, had to decrease by £270 per secondary pupil in the county, and the council is now confronted with a 10 per cent. increase in the pupil-teacher ratio. However much funny Tories may wish to argue, everyone knows that the lower the pupil-teacher ratio the better off children are. Counties have made substantial economies. Norwich city council has made economies of more than £8 million in one-off or recurrent reductions in expenditure and it has cut its staff by 15 per cent. in the past few years.
The Secretary of State usually rants on—he rants in a most seemly way, as you know, Mr. Deputy Speaker—about the Audit Commission report on the massive increase in white collar workers in local authorities. Sheffield has substantially cut the number of its white collar workers at a time when everyone else appears to be increasing theirs, but it has received no credit.
Shropshire has had to cut its spending by £26 million in the past four years. The cap will lead to cuts in schools, closure of old people's homes, cuts in home care, reductions in teacher jobs and reductions in books for children. The whole thing is wrong.
If the Government are trying to ensure that every local authority in the country can serve its local community in the way that it wishes and the way that it has been democratically elected to do, the settlement shows that the Government have got things wrong. If the figures are not the product of their getting things wrong, they are the

product of a malign approach to the future of many people, especially children and old people, throughout the country, and the country will not forgive them.

Mr. John Biffen: My right hon. Friend the Secretary of State for the Environment was challenged on account of the length of his speech. I regret that, because it is all too much of a rarity now to have a ministerial speech peppered with interventions, yet that is at the heart of the practice of Parliament and the exposition of difficult and arcane topics, and there are probably few topics more arcane than local authority expenditure. It was rather refreshing to hear my right hon. Friend approach the subject with all the fervour of the Cambridge Union. Although I found that approach uplifting, I intend to be a great deal more prosaic in my own comments—

Mr. John Garrett: And more brief.

Mr. Biffen: And certainly more brief. I shall concentrate upon the fortunes of Shropshire. The county sought a budget of just more than £245 million against the Department of the Environment's preferred budget of £239 million. It is the £6 million difference that has been at the heart of the discussions and the dissent. I pay tribute to the Minister of State for his courtesy and care in consulting Shropshire Members of Parliament—I see that the hon. Member for The Wrekin (Mr. Grocott) and my hon. Friend the Member for Ludlow (Mr. Gill) are in their places. Although that courtesy, alas, did not culminate in justice as far as I was concerned, nonetheless, in this sad world even courtesy has its advantages.
When we move from the statistics to the reality, we are talking about what the county can provide in terms of education, fire services and care for the elderly. I shall make only two points, but I believe that they go to the heart of the general debate rather than to the argument about the formula which sustains local government financing.
First, in examining the county's provision of education, fire services and care for the elderly, we must leave aside the detailed statistical analysis and ask whether they are the consequence of prodigal, feckless or irresponsible budgeting. One may argue about the priorities of that service provision, but I do not believe that it invites any of those judgments.
Shropshire asked to be permitted to make a modest fiscal judgment in order to take account of what it believed to be its responsibility to provide core services in the county. After all, it is not seeking the £6 million from Brussels or Westminster and Whitehall; it is being sought from a council tax that is paid by the Shropshire electorate. That is the heart of the dilemma.
My hon. Friend the Member for Surbiton (Mr. Tracey) touched upon the question of whether the capping structure still has the legitimacy that it once possessed. We must ask whether it has become so pervasive that it has ceased to be a safeguard and has instead become a straightjacket.
That is the heart of our dilemma this afternoon. It is not about the knock-about political relationship between erring counties and Whitehall and Westminster; it is about whether the relationship between central and local


government has enough flexibility to avoid oppressive centralisation. I sometimes think that the Department of the Environment is inspired by Jacques Delors in its relationship with local authorities. There is no place in the Tory pantheon for that degree of centralist dominance and that desire for formula uniformity.
I do not know how this evening's debate will conclude, although I understand that the motion will be passed. As a consequence of the debate, I hope that hon. Members will reflect upon the fact that we cannot return to this situation year after year because it will worsen year after year. We must now begin to think of a more flexible and acceptable arrangement.

Mr. Deputy Speaker: Order. When I called the right hon. Member for Shropshire, North (Mr. Biffen), I failed to remind the House that Madam Speaker has placed a ten-minute limit on the speeches of Back-Bench Members for the rest of the debate.

Mr. Bruce Grocott: It is a pleasure to follow the right hon. Member for Shropshire, North (Mr. Biffen) in the debate. I often agree with his individual arguments but that is probably the first time that I have agreed with everything that he has said. It prevents me from making several points that I would otherwise have mentioned.
Many hon. Members may be surprised that Shropshire should be so strongly opposed to this year's financial settlement. The efforts of Shropshire Members of Parliament and local councillors, who have repeatedly made all-party representations to Ministers in the past four years, has culminated in overwhelming opposition. Ministers always listen courteously to our views and—I hope that it will not be the same pattern this year—then reply that first, we should look at our budget to see if we can make any reductions or economies; and, secondly, say that we should look at our reserves.
Shropshire has certainly made real expenditure cuts in the past four years. I shall not mention them all, as I am trying to make my remarks as brief as those of the right hon. Member for Shropshire, North. There have been cuts in residential care for the elderly—including the closure of Castle Lodge in my constituency—which always cause upheaval and unhappiness.
There have been cuts in expenditure on schools. Hadley Manor school has closed. We have debates in this place where we swap figures and talk about real terms and base budgets, but the reality sinks in when one visits a building that last year was a thriving school but which is now boarded up. Part of the building has been turned into a centre for people with disabilities, and I am delighted about that. But the fact is that a school has been lost and we owe it to our constituents to try to prevent such closures.
Ministers always tell us to look at the county reserves. We have looked at them. In 1990 the reserves totalled £9.7 million and they have now decreased to £3 million—the Department of the Environment has said that that is about as low as they should go. We have made genuine attempts to deal with our problems in numerous meetings with Ministers over the years.
It is against that background that there was such an outcry this year. I have never experienced anything quite like the public response to the announcement of this

year's figures. Schools decided immediately that they simply could not impose the funding cuts and governors stated that they would not do so. There was unanimous opposition to the figures from the chairman of school governors, as well as all-party opposition on the county council.
Once again, we went to see the Minister. The council leader, Sue Davis; the leader of the Liberal Democrats, John Stevens; and the leader of the Conservatives, Brian Gillow, met the Minister to explain the seriousness of the situation and why they felt obliged to challenge the cap. Therefore, we were tremendously disappointed when we discovered that the Government had decided not to respond to our representations.
Small wonder that education has been hit particularly hard. Councillor Derek Woodvine, who is the chairman of the council education committee, also made representations to the Minister. Staff numbers in one primary school in my constituency will almost certainly decrease from seven to five, while class sizes will increase to 34 pupils. The working hours of nursery assistants employed on the home school link will be cut by two and a half hours a week, secretarial help will be cut by five hours a week and special needs will be cut by nine and a half hours a week. That is the situation at only one school. No wonder there was an enormous amount of opposition to the settlement. The depth of disappointment was not surprising.
I conclude with two thoughts. First, the cuts that will result from the decision will affect all council services. I cannot understand why the Government do not realise that the opposition from Shropshire reflects genuine community feeling. It is not orchestrated and it is not unique to Shropshire; it is a genuine reflection of what people feel and the Government ignore it at their peril. We hear rumours in the media that the Secretary of State for Education may realise it only too well.
Secondly, there really should be a better way of dealing with these matters. My first experience of local government was as chairman of the finance committee on a small district council more than 20 years ago. I look back on those days as a time of benign simplicity. Each year, we knew what the grant would be and we worked out the rate we had to set on the basis of the rateable value. We did not go to and from London with delegations to see Ministers. There was a Conservative Government at the time so it was not all happiness and light, but that was how things were done. They were times of great simplicity, when we did not always think that the people in Whitehall knew best.
Next year, as well as looking at the settlement for Shropshire again, I hope that the whole system of unnecessary bureaucracy, paperwork and delegations will be reviewed, and I hope that we return to the simplicity that worked for so long.

Mr. Anthony Coombs: I do not underestimate the difficulty of hon. Members representing such counties as Shropshire and I understand what my right hon. Friend the Member for Shropshire, North (Mr. Biffen) meant when he said that he would like the settlement to be a framework rather than a straitjacket. However, I would like to say a few words in favour of


the rate-capping settlement, in the context of a tight local government settlement, but one that I believe will be manageable.
I spent 10 years in local government—possibly not as long as many right hon. and hon. Members—and I had some sympathy for the hon. Member for The Wrekin (Mr. Grocott) when he said that the way in which grant is allocated in local government has become increasingly complicated over the years. There seems to be an unnecessary shuffling back and forth from Whitehall. It is a matter of regret that some 80 per cent. of resources in local government is now provided centrally rather than locally.
Local government should be vibrant and responsive to its local communities and raise a greater proportion of its revenue from them. In principle, I am against capping where it is not absolutely necessary, as it avoids the sins of profligate local authorities. Sadly, until two years ago, my local Labour-controlled Wyre Forest district council was overspending by some £2 million, or 20 per cent. per year. The cap let the council off the hook in respect of the local population.
As the Irishman said, "If you want to get somewhere, you have to find out where you are starting from". We start from a system of local government in which 80 per cent. of funding is provided by the taxpayer; we have a budget deficit and no less than 25 per cent. of total Government spending—something in the region of £43.5 billion this year—is spent by local government. Although only 10 out of 448 local authorities were capped and four of those had adjustments made to their caps as a result of representations to the Secretary of State, we need to control central and local government spending. Capping is one way of dealing with the most profligate or potentially profligate local authorities and providing an effective deterrent to other local authorities that might otherwise be tempted to overspend.
We have to consider, however, not only the possibly justifiable complaints from right hon. and hon. Members that some local authorities have a worse deal than others, but, as the hon. Member for Holborn and St. Pancras (Mr. Dobson) said, the deterrent provided by capping, and the standard spending assessment system in particular, meant that the increase in local government spending was only 5.2 per cent. Although that is higher than the rate of inflation, it is a better performance than local government has produced in recent years.
We also have to bear in mind long-term trends that will lead to significant additional proportions of gross national product—in addition to the 45 per cent. now being spent—going into Government spending because of the aging population and the tendency of local government to spend money on bureaucracy that does not directly benefit the population. The Audit Commission, in paying the piper, showed that between 1987 and 1983 the number of non-manual staff in local authorities rose by some 93,000 people—enough to fill Wembley stadium—at a cost of £10 billion.
Having heard the speech by my right hon. Friend the Secretary of State, I believe that the capping criteria have been sensitive to local needs generally, although people may disagree. The fact that he changed the formula for inner London boroughs and for police authorities is evidence of that. The fact that only six out of 448

authorities were capped and then were unable to achieve any adjustment after talks with Ministers, is evidence of a certain amount of flexibility and demonstrates that capping has not been oppressive for the majority of local authorities.
Before we fall out with the SSA system upon which the capping regime is based, we should bear in mind that the Audit Commission recently concluded that SSAs were
A more sophisticated system for equalising needs than any overseas system … and an improvement over its predecessor in many respects.
In another recent study, Rita Hale of CIPFA and Tony Travers of the London School of Economics said:
no overseas country appears to have a full grant system which goes so far in its attempt to achieve full equalisation.
I appreciate that the way in which the SSA is calculated for education and the police service is extremely complex and I do not agree with every instance of it. In the debate on the SSA, I argued on behalf of my own county that the area cost adjustment ought to be either reformed or abolished altogether and that SSA adjustments did not reflect the needs of relatively large towns with inner city problems that are situated in rural areas, such as Kidderminster, Worcester and possibly Bridgnorth and other towns in Shropshire.
As any system of allocated grant on a national basis on such a scale inevitably will have an element of sophistication and possibly even rough justice, and as independent reports suggest that it is about as fair as any in the world, it would be unfair and wrong to fall out about it and say that capping necessarily leads to injustice.
In my own county, we have a very tight settlement, particularly in education where teachers' pay has increased by 2.2 per cent. instead of 3.7 per cent. We know that it is a tight year, but we think that it is manageable. If, in the long term, the capping regime reduces local government expenditure and therefore the total demands that central Government make on the taxpayer to allow a lower tax base and a more vibrant economy, it is well worth supporting.

Mr. David Rendel: Capping must go, and capping will go. It must do so because, until it has gone, local government cannot fulfil its real purpose—the accountable provision of genuinely local services that serve local needs and are determined by local people. Capping clearly undermines the accountability of all elected councillors. I recognise that the Conservative party may not worry too much about that as they are now the least important party in local government with fewer councillors than either the Liberal Democrats or the Labour party. The Conservatives face the prospect of falling even further behind the two major parties next year.
Surely, a lack of accountability in local government should still be of great concern to Conservative Members. A lot of nonsense is talked by some hon. Members about irresponsible overspending by local authorities. Those Members seem to see it as their life's mission to denigrate their own councils, but in practice there is far more irresponsible waste of resources by central Government nowadays than there is by local government. We have only to look at Whitehall's expenditure on management consultants, for instance, to see that.
The truth is that only one county council has set a budget significantly under its capping limit, and that is Essex, controlled jointly by Liberal Democrats and Labour. The solitary Conservative-run county council, Buckinghamshire, is spending right up to its capping limit and has increased its council tax this year by more than 8 per cent.—a long way above inflation. Three quarters of all the counties and the metropolitan and London boroughs are now spending up to their capping limits. Their spending and their revenue is determined not by local councillors but by central Government.
The whole system, therefore, needs a complete overhaul—an overhaul that devolves power to local communities and starts from the premise that local people are the best judges of their needs and of what they can afford to pay.
Today, we have to take a decision as to whether we can set the ball rolling. We have to ask ourselves whether seven particular authorities have set such outrageous budgets that local people require the protection of nanny, in the form of central Government. For that is the Secretary of State's view of the purpose of capping.
On 1 February this year, the Secretary of State proclaimed:
the capping mechanism was introduced because, in some areas, people were unable to pay the high cost of administrations".—[Official Report, 1 February 1995; Vol. 253, c. 1109]
With that in mind, let us look at Devon and Gloucestershire. These authorities have set budgets which, when adjusted for the change in police authority finance, leave their council taxes at the same level in cash terms as last year. In real terms, the figures are well down. In view of the enormous burden placed on local authorities by the local government settlement, that is a formidable achievement.
So how can Devon and Gloucestershire be deemed by the Government to be acting extravagantly? Are the Government arguing that the level set last year was absurdly high—was, indeed, completely unaffordable? To argue that would mean an admission that last year the Government failed to cap those authorities at an affordable level. Since that would be the first time the Government have accepted that they made a mistake, it would seem highly unlikely that that is what they are arguing.
So are the Government arguing that what appeared at first to be affordable at the beginning of last year turned out unaffordable at the end of it? On the contrary, both counties have council tax collection rates that are much higher than average. Clearly the local people are able and willing to invest in their communities. So if this level of council tax was affordable, as it clearly was, last year, how can the same level of council tax be unaffordable this year? On the basis of the Secretary of State's own rationale for capping, there is no excuse for capping in these cases.
There is still some hope, however. Let us hear the views of Mavis, Lady Dunrossil, the Conservative spokesman in Gloucestershire who expressed her disappointment when responding to the announcement the other day that Gloucestershire's capping was to go ahead:
I really thought Ministers had been persuaded by the justice of our case. There is still a chance of over-turning this decision if Gloucestershire's Conservative MPs will openly declare their support for us. The proposed County budget over-cap has the full

support of all Gloucestershire GM and LEA schools, and involved no increase for the local taxpayers. I appeal to all Conservative MPs to support our schools".
The councils that I am talking about are not profligate, loony councils. Gloucestershire, whose budget this year had the full support of the Conservatives as well as of the Liberal Democrats, has cut the central cost of its education department by 24 per cent. over the past four years. It has made savings of £1.5 million in central administrative departments and has cut the number of staff by 23 per cent.
In Devon, support costs are 36 per cent. lower than for the average county. Over the past three years, Devon's central support staff have been cut by 8 per cent. Senior managers' numbers have been cut by 15 per cent., and this year alone chief officers will have their numbers cut by 15 per cent.
Both Devon and Gloucestershire have already slashed their reserves to just 1 per cent. of their budgets. Indeed, Devon's level of reserves in March 1994 prompted external auditors to remark that the council should
ensure that there is no further depletion of its non-earmarked balances. In the longer term, it should be looking to rebuild these to more prudent levels".
The level of reserves today is little more than one third the amount that drew this cautionary note.
Contrast this with Buckinghamshire's increase in council tax, at twice the rate of inflation, or Huntingdonshire's increase, at twice the average for English districts. That shows how absurd it is when Conservative Members talk about profligacy merely in Liberal Democrat or Labour-run authorities.
We must examine the real cost of imposing a cap on these authorities. There are likely to be about 3,000 redundancies in the seven authorities covered by the order. I realise that many Conservative Members equate redundancies with efficiency, but even in their terms, ignoring the human cost, is it really efficient for the nation to have to pay all that extra unemployment benefit instead of keeping these people doing useful and productive jobs?
I ask Conservative Members to consider also the enormous cost of re-billing in those authorities; in Devon, it could cost more than £500,000. What kind of folly is it to impose further cuts on already tight budgets, just to spend millions of pounds on unnecessary postage? That is what the Government are doing with their capping recommendations.
We should also think about the impact on our schools, on road safety and on the provision of a whole range of vital services. We should think of the parent of a young child who requires a statement of special needs but cannot get one because there are never enough educational psychologists. We should think of the pensioner who depends on home helps and meals on wheels but who can no longer afford those crucial services even where they are still offered. We should think of the student hoping to further his education but who cannot obtain a discretionary grant because the council cannot afford one. We should think of the child who last year studied in a class of 30 but will now have to study in a class of 38 other children—a genuine example that has come to my attention.
It is time the Conservatives realised that local government services are not just some sort of luxury. Perhaps if they had grasped that fact they might not have had such a complete humiliation in the local elections last month.
Nor can the Government any longer use the argument that capping is necessary for the sake of the national economy—as some Conservative Members argued today. It is now clear that, in some cases at least, the capping regime means that local authority budgets are set higher than they need to be. Many councils feel under considerable pressure to budget right up to cap, whether the expenditure is necessary or not in a particular year, because of a fear that they will otherwise lose out next time round.
Capping can cost local authorities in other ways as well. In Devon, the county has resolved to secure as much European funding as it can—rightly so. That requires matched funding from the county. If the Devon Conservatives get their way, in order to meet their capping restriction, half the cuts will come from their European matching funds budget, thereby costing the county many hundreds of thousands of pounds in European revenue. I want to make it quite clear to all who are thinking of going into the Government Lobby tonight that they will be voting for Britain to lose out on its fair share of European funds.
Now there are strong rumours that the Government may be preparing another U-turn on capping. If there is any truth in those rumours, how can it be right to cap the seven authorities today, with all the costs that that entails, only to abolish capping next month? That is simply ludicrous. If the Government are ready to acknowledge that the system is not working, they should do so now.
Capping must go, and I urge Conservative Members to show some courage and vote against the motion. The order makes no sense. It will cost millions of pounds to implement, it subverts the whole purpose of local government, and the House should have nothing to do with it.

Sir Irvine Patnick: On 25 May last year, when the House debated council tax in Sheffield, I, as a Whip, was not able to take part officially. Despite that stricture, however, I was heard, and Hansard records my participation.
During that debate, my hon. Friend the Minister congratulated Sheffield on establishing a more secure financial base. The united pleas of Sheffield city council and others—including the Sheffield Members of Parliament—resulted in a £3 million increase in the amount originally proposed for the city. Each year, I have made representations to ensure that Sheffield is given its proper chunk of the nation's cake, crumbs and all.
I do not propose to make party-political points about why Sheffield is in its present position, or to apportion blame for its past mistakes. Many Sheffield residents, however, have taken to comparing the city with Manchester for the purposes of standard spending assessments. As the Minister knows, Manchester has more ethnic minorities, more one-parent families and more people on income support. All those factors determine standard spending assessments.
Manchester does not have the same physical characteristics as Sheffield, which makes any direct comparison impossible; but many people continue to measure Sheffield against Manchester. When I first entered local government some time ago, a rivalry existed between Sheffield and Leeds: indeed, it still exists. At that time, Sheffield compared itself with Leeds, but now that it obtains more from the Government than Leeds it has sought another city on which to base its arguments and has chosen Manchester.
The Government have responded in many positive ways, making a Minister responsible for Sheffield, approving the city's bid for a single regeneration budget and allowing credit approvals for part of the Sheffield inner ring road. Many other instances debunk the myth that the Government do not care about Sheffield. I am grateful to Ministers for meeting me on many occasions, and also for meeting an all-party delegation from Sheffield, of which I was a leading member. Ministers at the Department for Education have also listened to claims relating to Sheffield's circumstances.
However, my hon. Friend the Minister will not be surprised to learn that, on several counts, I am disappointed by the decision for Sheffield. I am sorry that its request for redetermination was not accepted. The expenditure limits contained in its SSA allowed for the cost of supertram, which greatly concerns not only Sheffield city council but Barnsley, Doncaster, Rotherham and all the other south Yorkshire authorities.
It was always understood—at least by south Yorkshire authorities, and by me—that no financial burden would be placed on local taxpayers. Thanks to supertram, the city council's share of the passenger transport authority's levy has risen by £1.69 million: the 1995–96 figure represents an increase of 8.7 per cent. Just under £1.5 million of that relates to the city's share of the capital financing costs of supertram, which increased by 51 per cent. over the previous year. Furthermore, the effects of supertram road works have influenced the city's traffic count for SSA purposes. Against all predictions, there was a 9 per cent. reduction in traffic flow last year. Sheffield estimates a loss of just under £1 million in the city highway maintenance allowance for 1995–96; I trust that that will be rectified next year, if not this year.
Oddly, not much traffic was passing the census points selected. In fact, all the traffic had been diverted owing to the construction of the supertram route. That is nonsensical.
Difficulties were experienced during 1994–95 in achieving a renegotiation of the council's debt repayment profile with the banks. That was due to factors outside the council's control, resulting in a judgment in the Credit Suisse v. Allerdale district council case. The implications of the judgment have compounded the wary attitude of financial institutions towards complex financial dealings with local authorities. That originally resulted from the interest swap case involving the London borough of Hammersmith and Fulham.
Sheffield city council is near to completing new arrangements with the bank and the Housing Corporation in respect of its housing partnership funding, and believes that that will facilitate further progress in other debt rescheduling. The delay, however, prevented the council from taking advantage of comprehensive rescheduling at


an earlier date, which it had hoped to do. The rescheduling had been estimated to involve over £20 million this year alone.
Sheffield acknowledges, and is grateful for, the assistance of the Minister for Local Government, Housing and Urban Regeneration and the district auditor in answering points raised by the banks and giving reassurance about the propriety of Sheffield's existing and proposed arrangements. The council has also identified several elements of the SSA which were omitted from the 1993 SSA review, and brought them to the Minister's attention. Those elements, which disadvantage Sheffield, are the social index, the children's social service SSA, the area cost adjustment and the treatment of capital financing.
I urge the Minister to re-examine Sheffield's pleas for reconsideration. Its request is based on the Supertram effect on the SSA, the Allerdale case and points—some of which I have outlined—that were made when the Sheffield delegation met Ministers to discuss elements of the SSA that were not reformed in the 1993 review. Action on any or all off those matters will assist Sheffield greatly.
I hope to receive a positive response that will enable Sheffield to continue the reorganisation of its financial base in line with its plans for improved efficiency and better financial management. It has shown its ability to put its affairs on to a more even footing; it now requires further consideration and assistance from the Minister. I give notice that I intend to press hard for a revision of the SSA on Supertram, further help with the rescheduling of Sheffield's debt and changes in the SSA to favour Sheffield.

Mr. John Garrett: The city of Norwich has been grievously treated by the capping order. The level proposed will lead to a substantial loss of services and the closure of some heavily used facilities. The city is well run, as can be attested by outside and objective studies of its management by the Audit Commission and other bodies.
Norwich has a particular problem, in that its resource base is much smaller than the population that it serves. It is a regional centre of East Anglia in regard to employment, industry, commerce, shopping, tourism, the arts and culture.

The Parliamentary Under-Secretary of State for the Environment (Mr. Robert B. Jones): Will the hon. Gentleman give way?

Mr. Garrett: I have barely started.

Mr. Jones: It is on the point that the hon. Gentleman has just made.

Mr. Garrett: How could the Minister disagree with it?

Mr. Jones: I do not disagree with it. If the hon. Gentleman is claiming that the aspects that he mentioned are important advantages for Norwich, however, how can he justify what the hon. Member for Holborn and St Pancras (Mr. Dobson) said about wanting to scrap the "day visitors" element of the SSA, which benefits Norwich for precisely the reasons that he has cited?

Mr. Garrett: The day visitors allowance does not benefit Norwich particularly. My hon. Friend was talking

about Westminster. There is a small difference between tourist visitors to Westminster and visitors to Norwich. I must say that I wish I had not given way to the Minister.
The ratio between Norwich's daytime population and its resident population is higher than in any other shire district. A city of 100,000 people serves a population of 500,000 in the county. It has high levels of social deprivation and population density, and a low-income community—the 64th lowest paid in the country, including London and the metropolitan boroughs. Recent reports suggest that 30,000 people live below the poverty line in Norwich, a higher proportion than in Birmingham or Sheffield. Norwich has recently received some really hard blows with some 2,500 jobs losses having been announced this year so far. If one allows for the multiplier, 5,000 jobs will be lost as a consequence. That means that the standard of living in the city will fall rapidly.
The capping limit will require revenue expenditure cuts of £5.5 million over the financial years 1995–96 and 1996–97. This is almost one third of the net general fund revenue budget and will mean major reductions in direct services. Recurrent cuts of £5.5 million and a one-off cut of £3 million have already been made in recent years. The cuts have been made overwhelmingly from overheads and not direct services. In the same period, over 350 jobs have been lost, which is 15 per cent. of the council's employment.
By the end of 1995–96, general fund reserves will have been reduced to £1 million, which is the lowest prudent level. There are no other reserves for trading or other general fund activities. The level of further recurrent cuts to be made by 1996–97 has risen to £5.5 million. That means that over four years, cuts totalling £11 million will have been required if the current system of national financial control is to be complied with and the designated budget achieved. That scale of cuts represents over 40 per cent. of net general fund spending and 22 per cent. of gross general fund spending, excluding housing benefit payments.
The cuts will impact on virtually all services with reductions in quality and standards, the closure of facilities and the cessation of services. The scope for further cuts in overheads is limited, with the result that there will be major reductions of direct services. That will mean greatly reduced, almost non-existent, discretionary services. The council will find it extremely difficult to meet its mandatory obligations. The whole appearance, culture and life of the city will deteriorate.
It seems to me that that is an exceptionally vindictive action. It may have been taken because, for 60 years, Norwich has been controlled by a very competent Labour authority. The number of Tories on Norwich city council has been reduced to one; as she is the mayor, there is no Conservative voice whatsoever on the city council.
Two important and well-loved community centres will have to be closed. Today, a petition with 25,000 names was presented to the city council asking that those community centres be kept open. One receives 150,000 visits a year. The tourist information centre will have to be largely closed, yet we are trying to develop the tourist industry. The income from tourism is spread throughout the city, in shops, hotels and restaurants.
The fact is that capping is a rotten system that does not recognise the particular needs of the city of Norwich which, by the way, has 1,600 listed buildings to look after


and the largest collection of pre-reformation churches in western Europe. All that is the result of being the capital of a region. The Government's formula does not reflect the needs of, or the demands made on, the city council. It is with great regret that I have seen that the Government will not change their mind but retribution will come at the next general election.

Mr. Patrick Nicholls: The hon. Member for The Wrekin (Mr. Grocott) used a phrase that struck a chord with me. He said that whatever view one takes about how we got here, we must try to ensure that we do not get into this position again.
I have long taken the view that a system whereby education funding is split, with one body responsible for providing the funds and the other for spending them, can never run satisfactorily. Parents will never know who is ultimately responsible for funding, whether for a major crisis such as the present one, or the standard running crisis that we have from year to year.
When parents are told that there is not enough money, they go to their county councillor, who blames the Government and perhaps the Member of Parliament. They go to their Member of Parliament, who blames the county councillor. At worst, both are probably not being wholly accurate and at best they honestly believe that the other is to blame. As long as funding is split, parents will not, ultimately, feel confident about the education system.
I have noticed with this matter more than with any other issue in the 12 or so years that I have been in the House how desperate and horrified parents have been by developments in Devon. One problem is that politicians use words to try to make a point, but in the end the words become devalued.
To talk about desperation and terror is justifiable, given the letters that I have received and what the people who come to my surgeries say. People going about their daily lives are not interested in the constant party political battle. All they want is their children's education to be funded properly. They have one opportunity and one alone to have that education funded at the proper time for their children.
People going about their own busy lives do not feel qualified to try to understand the minutiae of local government finance. They feel desperate and that, to some extent, politicians are misusing the statistics to try to hide things from them.
Perhaps I ought to declare an interest. Many Back Benchers spoke with such confidence and assurance about the figures that I have to wonder why I do not. I can only pray in aid the fact that I have been a local councillor and an Environment Minister. If I find it difficult to get on top of the figures, I can well understand that others find them difficult, too.
People in Devon may consider how the argument has been presented in Devon. The first thing that Devon county council did was to trumpet its case to the public on the basis that it had received less money this year than last. That is simply not true. When such a thing is said by people outside the House, I can describe it as what it is: a lie. I specifically do not comment on the fact that the same point was made by the hon. Member for Newbury

(Mr. Rendel). The fact is that Devon got more money for education, not less. It may not have been a great deal more, but even in Liberal Democrat-speak, an increase that is less than one would like does not amount to a decrease. Whatever figures one uses, that is a salient and cogent fact, but Devon county council has done everything in its power to ensure that the public do not understand it. This year, Devon county council got more for education, not less.
Devon county council next tried to say that it had been treated worse than the average. Depending on what measure is used, it has been treated at least as well as, and in some respects better than, the average. It has been caught on that as well.
Perhaps the most crucial and telling point of all that anyone, whether or not they pretend to understand the minutiae of local government finance, can understand is that in Devon, the Conservative county councillors proposed a budget that was feasible, involved no swingeing cuts in education and, in passing, would also have reduced the council tax. It was voted down by the Liberal Democrat administration.
I could understand it if the Liberals had taken the view that, although it is the party of permanent opposition, it was temporarily in control and perhaps ought to work responsibly to set its own priorities. It should have said, "We are sorry, but when push comes to shove, we prefer to cut education." That would at least have been honest.

Mr. Harvey: rose—

Mr. Nicholls: The hon. Gentleman can repeat his untruths later. He can repeat outside the case that the Liberal councillors are making in county hall. The longer he holds me up in my speech, the less opportunity the public will have for him to repeat it.
The fact is that a budget was put forward—not an easy budget; there are no easy budgets to deal with this settlement. However, it was a budget that could have been set and would have meant in the end no cuts in education. Surely it would have been more honest if the Liberal Democrat administration had been prepared to argue the case on its merits instead of trying to mislead people about the facts.
This very day, in an intervention to my right hon. Friend the Secretary of State, I put a series of figures that Devon county council came up with just hours ago. What do we find? We find that those apparently authoritative figures make a comparison between Devon and Somerset and exclude redundancy costs for Devon, but include them for Somerset. When the council still could not paint the picture that it wanted to paint, I understand that it got to the stage where it decided to recount adult heads of population rather than concentrate on the children. Perhaps we shall hear more about that in the winding-up speeches. Anyone who has been a west country politician for as long as I have knows that one cannot expect very much from the malignant nonentities who are the Liberal councillors. However, it is immensely sad to see experienced professional senior council officers prepared to traduce their integrity by producing such figures.

Mr. Gummer: Is my hon. Friend aware that the figures adduced by Devon city council when it put its case to my Department were not those that it gave to Members of Parliament today? In other words, faced with people who knew the facts, Devon produced figures different from


those with which it sought to mislead Members of Parliament, who might not perhaps have had the background that would have enabled them to criticise the figures.

Mr. Nicholls: My right hon. Friend is entirely right. Not only were different sets of figures produced but, in due course and if necessary, Devon county council will produce different figures again.
The settlement has not been easy, but Devon was treated better than some counties. I hope that, in the end, parents in Devon will come to understand that, as long as we have a system under which functions are split, it is not sufficient to make the easy judgment that it must be the Government of the day who are to blame. Rightly or wrongly, for the time being we have a system under which the discharge of education obligations is shared by local and national Government. To judge by the figures, there is no doubt that the Government have played their part. Even without being able to understand every jot and tittle of the figures, one has only to consider the dishonest way in which the matter was presented in Devon to realise the truth.

Mr. Jim Cousins: Having heard the lamentable and disgraceful speech by the hon. Member for Teignbridge (Mr. Nicholls), I begin by paying tribute to the 78 elected councillors in Newcastle, the 250 directly elected school governors in the city and the tens of thousands of people like them across the country who are prepared to take on responsibilities every day. I find it shocking that some, although not all, Conservative Members have snarled about such people or even called them, as the hon. Gentleman did, "malignant nonentities", or complain because such people have put them on the spot. In fact, such men and women are the bedrock of our democracy and have to make difficult decisions every day in the performance of the duties that they carry out on behalf of local people.
I said that I wanted to pay tribute to the 78 elected councillors in Newcastle, but I want to go a mite further and pay tribute to the former leader of the Conservative group on the city council, who lost his seat in the recent local elections thanks to his own party. He was my opponent at the previous general election, so if anyone has reason to use the type of language used by the hon. Member for Teignbridge, it might be me. However, he has behaved absolutely honourably over the issue of capping. He could not be described as a malignant nonentity; he is a man of honour and should be respected.
The situation in Newcastle is wholly perverse, and no one can understand it. The Government told the city council that its needs were such that it ought to spend £2 million more, but the capping criteria mean that, unfortunately, the council is not allowed to spend £1 million of that money. Who can understand and explain that?
The new Labour leader of the city council said that surely everyone in the city could work together to come up with a more sensible proposition. All parties on the city council, all the school governors and the local evening newspaper came up with a contract for Newcastle, which consisted of a proposal that the Government want to vote down this evening.
The proposition would have put money back into the city's expenditure specifically for education and social services and would have prevented the loss of some day care provision. It would have meant 250 to 300 people receiving the vocational training that they will not receive if, as seems likely, the order is agreed. The proposal would have put money back into the schools budget and saved more than 100 jobs, 75 of them for teachers, and provided flexibility.
The Labour leader of the city council said that he would not go to the Government simply to ask for extra money, but would set out how it would be spent. He would go to the Government only if he could say that he had the support of the people of the city and all the political parties on the city council. He worked at it and he achieved that support by working out a package of proposals that would have done all that I described and cut the council tax by £43.
It is hard to imagine that any sensible Government could possibly have turned down a package that would have allowed to be spent the money that the Government said should be spent, which would have avoided some nasty cuts and, at the same time, would have cut the council tax by £43. That is the proposal that the Government have turned down.
How can anyone of any political party explain such a decision to a primary school which has a 70 per cent. turnover of kids each year and which is faced with the loss of teachers? How can anyone explain it to a secondary school in my constituency which has just had a bad report but which is experiencing great difficulties and faces the loss of 17 teachers? How can anyone explain the Government's decision to vote down a package of proposals which would have cut the council tax, increased various aspects of the city's spending and saved jobs and which had the support of all political parties locally and the school governors?
This year, 10 or 12 councils came back to the Government for a revision of their cap. That does not mean that there were not 100 councils that wanted to do the same, but only 10 or 12 had seen the necessary anxiety expressed in their communities, which meant that they were prepared to have a go, although they knew that they would not be listened to. That is why only 10 or 12 councils went back to the Government. All but two or three of them have been turned down.
This is a bad day, not only for the city of Newcastle but for democracy as a whole. It is not only capping that has to go, but the Government, who are prepared to enforce it in this way.

Mr. Christopher Gill: I begin by endorsing the remarks made by my right hon. Friend the Member for Shropshire, North (Mr. Biffen), who thanked my hon. Friend the Minister for his unfailing courtesy on the many occasions when Shropshire Members of Parliament have met him to make strong representations on behalf of Shropshire and the particular difficulties experienced by the county. I hope that the Minister will forgive me if I preface my remarks by striking a slightly discordant note.
In speaking against the imposition of a cap on local government expenditure in Shropshire, I remind the House that last November I declined to support a motion to send extra money to the European Union because what


is spent abroad cannot be spent at home. There was not then, nor is there now, a popular mandate for Euro-spending—quite the reverse—and there was no political kudos to be gained from increased spending in that direction. The popular demand, and the political price to be paid for failing to recognise it, is all here, at home, and home, as far as I am concerned, is Shropshire. Salopians, many of whom are observing these proceedings this evening, live in the same world as other citizens. We are subject to the same laws and, incidentally, the obligations that those laws impose on local authorities. We have to pay schoolteachers on the same salary scales as other local authorities and we have to pay the same taxes.
In Shropshire, incomes are below average. Economies of scale do not apply, because our county is large and sparsely populated. Those factors are not adequately reflected in the standard spending assessment formula. Our argument is with the way in which taxpayers' money has been distributed since the basis was changed in April 1990 from the former grant-related expenditure assessment to the current SSA, in such a way that, for example, Hampshire has been able to amass huge reserves—£92 million as at 1 April last year compared with Shropshire's £7 million. I do not for one minute accept that that is simply a result of good or bad housekeeping.
Adjoining Powys, for example, can levy a council tax of less than £400 on a band D, against a comparable figure of more than £600 in Shropshire. The education SSA for a primary school child in Shropshire is £1,862, and for a secondary school child it is £2,482, against corresponding figures in the London borough of Southwark of £2,947 and £4,097. The leader of that authority, incidentally, is on record as saying that it is well satisfied with this year's revenue support grant settlement.
This argument, as the hon. Member for The Wrekin (Mr. Grocott) pointed out, has raged for four years. Every year, since 1990, Shropshire's position has become progressively worse, in spite of endless meetings with Ministers—including one with my right hon. Friend the Prime Minister himself—mountains of correspondence and an enormous expenditure of time and effort. But all to no avail. I very much regret having been put in the position where, in the final analysis, all that I can now do to express the frustration and justifiable anger of my councillors and constituents is to vote against the order tonight.
I hope that my right hon. Friend the Secretary of State will recognise that the fundamental problems intrinsic in the SSA formula have been accentuated by the imposition of capping, a feature of Treasury control that many of us had believed would never be applied other than to the most profligate of local authorities. The effects of capping are plain for all to see, but I shall rehearse some of them again in the hope that Ministers will now conclude that the time has come to end this erosion of local democracy and accountability.
Voters can vote for socialist councillors—of course, I regard both Labour and Liberal Democrats as being socialist—with impunity, knowing that the consequences of their actions will not result in dramatically increased council tax bills. Conservative councillors, on the other hand, have become demoralised, demotivated, and

ultimately, as evidenced in recent elections, defeated. They can also, as can be seen in Shropshire, be driven into a coalition with Labour and Labour Democrats in opposition to a Tory Government.
There is only one practical way forward: capping has to be abandoned. Education and social services have to become a charge against the national taxpayer, and all other local authority expenditure has to be exclusively at the expense of the council tax payer.
I look forward to the day when my Government accept, first, the principle of subsidiarity; and, secondly, the importance of vesting responsibility, and the authority to discharge that responsibility, in the same hands—ideally, the hands of unitary authorities.

Several hon. Members: rose—

Mr. Deputy Speaker: Order. Some 30 minutes remain for Back-Benchers' speeches. Four hon. Members are hoping to catch my eye. With a little co-operation, they all might do so.

Mr. Michael Clapham: It is disappointing that the Secretary of State for the Environment did not agree the re-determination of Barnsley council's budget in full. The £2 million relaxation of the cap will be only temporary relief. Barnsley has a good case for considerably more Government assistance, and I shall set it out in few moments.
Barnsley was capped at £150.625 million. In the face of the service implications of that capping, the council set a budget of £153.719 million. The budget was based on what it considered necessary to provide the local community with the essential services that it required. The cap adjustment, therefore, is £1.1 million short of what the council considered it needed to provide basic services.
My disappointment follows the Government's failure, it seems, to accept that Barnsley metropolitan borough council has special circumstances that set it apart, and to recognise that its problems will require more spending, not less, if they are to be tackled positively. Barnsley has intractable social, economic and environmental problems, which are directly related to the Government's speedy rundown—I emphasise that it was the Government's speedy rundown—of the coal industry, and the legacy that that has left behind. The statistics that I shall quote show clearly the problems that Barnsley metropolitan borough council has to face.
Since 1985, we have lost 21,000 mining jobs. The average wage in the mining industry is roughly £20,000 per annum. At today's prices, in wages alone, Barnsley has lost about £420 million from its local economy. That does not take into consideration the knock-on effect of that, or, indeed, the rates that have been lost from British Coal properties and from associated engineering properties that have since closed.
One third of households in Barnsley have at least one person suffering from a disabling disease. Between 1981 and 1991, there was a 19 per cent. decrease in employment in the Barnsley metropolitan borough council area. Since 1979, there has been a 230 per cent. increase in crime. In 1979, Barnsley was 25 per cent. below the


average rate of crime; in 1994, it was 13 per cent. above it. I believe that that points clearly to the relationship between unemployment and crime.
The country has benefited for more than 100 years from the wealth that coal miners in Barnsley and district have released from the ground. The Government now have a duty to put something back. There is an urgent need to repair the damage that has been caused to the community by the demise of the coal mining industry and the associated engineering industry, and to rebuild the local economy. That will increase social and economic opportunities among the local population. Unfortunately, Barnsley's spending needs have never been addressed in a proper way within a proper framework. Consequently, the needs of the community have not been assessed in a properly measured way. We suffered from a low standard spending assessment and the formula has not been sophisticated or sensitive enough to pick up Barnsley's spending needs. As a result, in the period 1990–95 services were cut by £35 million in Barnsley metropolitan district area. This year there is likely to be a further cut in services of about £10 million. That will result in the loss of 270 local authority jobs. I was told today that between 20 and 30 teachers may also lose their jobs.
The problems have been compounded by the rigidity of the capping regime. The Minister will know that although Barnsley received an SSA increase in the 1994 review, it was capped at 0.5 per cent. above the SSA level. Therefore the ceiling was very low. If the revised formula of 1994 had been introduced in 1990–91, Barnsley would have had a £156 million budget this year compared with the capped budget set originally by the Secretary of State at £150.4 million.
I spoke about Barnsley's special problems. Poverty is one such problem that the local authority has to confront. I shall give three statistics to show the House the horrendous problems that the authority has to face. In the past four years there has been a 71 per cent. increase in the number of children receiving clothing grants, and a 71 per cent. increase in the number of children on free school meals. One in three households in the Barnsley metropolitan area receives council tax rebates, and one third of those who are unemployed have been unemployed for more than a year.
Under the funding system Barnsley has been hit extremely hard. That is particularly true of social services and education, and the latter service clearly illustrates the point. In the period 1990–94, the number of teachers was reduced by 3 per cent., and Barnsley has one of the highest pupil-teacher ratios in the country. Discretionary awards have all but ceased; the school music service has been deleted; the school swimming programme has been stopped; and community education has all but disappeared. There is currently a £12 million backlog of school building repairs.
Barnsley has to bear the cost of supertram and the impact of that project is another local circumstance that is causing a great deal of concern. The South Yorkshire passenger transport authority levy on Barnsley metropolitan council to fund the supertram in 1995–96 displaces £1.326 million worth of the district council's services within the capping limit. The share of that for Barnsley taxpayers is £525,000. I understand that south Yorkshire authorities were given a ministerial assurance that the supertram project would not have an impact on

local taxation. Perhaps the Minister will say whether he intends to provide the assistance that he promised by way of revenue support grant.
Barnsley has had a raw deal over the past few years. Its proposed budget was unanimously agreed—I emphasise "unanimously agreed"—by all the political parties and by representatives of all sections of the community. The council has always steered a prudent line that has been acclaimed by the independent auditors. It works hard with its local partners. However, the Government need to recognise the circumstances that are peculiar to Barnsley and should meet their duty to the community by providing the funding that is necessary to stimulate the regeneration of the district.

Mr. James Pawsey: I wish to make three swift points, the first of which relates to area cost adjustment. As it is currently drawn, that adjustment leads to serious anomalies, especially when one authority gets the benefit of the ACA and an adjacent one does not. That point is strengthened when we remember that in much of local government national pay rates apply. A teacher in Oxfordshire is paid precisely the same as one in Warwickshire, yet Oxfordshire gets area cost adjustment and Warwickshire does not. The area cost adjustment should be abolished.
Secondly, the standard spending assessment is unduly complex and certainly not understood. It leads to difficulties, for example, in the fire service and education, and it undoubtedly needs major simplification. I shall confine myself to capping. We should abolish the cap. [HON. MEMBERS: "Hear, hear."] I was a local councillor for 21 years and for all that time there was no capping. It is a recent invention that has been in place for some 11 years and the time has come for it to be scrapped. We should restore a real measure of local democracy. Its abolition would substantially enhance and increase accountability and would improve the quality of councillors. But above all, it would allow local authorities to spend much more closely in accordance with perceived local needs. That is democracy in action. If local people wish to spend more on education, on teachers, they should be able to do that.

Mr. Tracey: Does my hon. Friend accept that the cries of "Hear, hear" from Opposition Members when he spoke about lifting the cap are rather cynical? In my area the Liberal-controlled council said, "Lift the cap", and blamed everything on central Government. But when there is a rumour that my right hon. Friend the Prime Minister might be about to lift the cap, it says that he wants to do so to stigmatise the local council.

Mr. Pawsey: I am grateful to my hon. Friend for his powerful intervention. I want the cap to be abolished, and if it is the buck will stop with the local authority. There will be no point in Opposition Members moaning and grousing about what the Government do or do not do because the buck will stop firmly with local authorities.
I am grateful to you, Mr. Deputy Speaker, for allowing me to take part in the debate and I thank Opposition Members for giving me a little of their time. There is concern that irresponsible local authorities may go on spending sprees. That concern could be allayed by letting


them elect one third of councillors each year because there is nothing like an election to sharpen a councillor's mind. That is the answer to irresponsible local authorities.

Mr. David Jamieson: I did not think that I would totally agree with the hon. Member for Rugby and Kenilworth (Mr. Pawsey). He could have made his speech just as easily from the Opposition Benches. Perhaps he has something in mind that he has not told us about.
The debate is unusual because the vote will have a direct and profound effect on our constituents. There is a direct link between the vote and the fortunes of our constituents and schoolchildren, and it will also affect the vulnerable and the elderly who are in local authority care. The debate is being carefully watched by people throughout the country and especially by those within the areas of authorities that are being capped. I am sure that those people will use that experience in deciding how to vote in future.
The debate raises fundamental issues about the accountability of councils. I agree with the hon. Member for Rugby and Kenilworth who, sadly, is now leaving the Chamber, that one can vote councillors in but also vote them out. If people like the high services and want to spend more money, let them carry on voting those councils in. If they do not like that, let them vote them out.
I shall contain my brief comments to matters that concern Devon and Somerset, two counties that have so much in common but that have been treated so unevenly by the Government. What is at issue is simple: do we accept Devon's figure, which is £4.4 million above what the Government say it should spend on its local services? Despite the attempts by Conservative Members—I am sad to see that no Conservative Members representing Devon are in the Chamber—to obscure so many of the issues, they are simple.
Taking our education budget for 1995–96 and including the teachers' pay award, inflation and increased pupil numbers, Devon would require another £9 million for a budget that, in real terms, would stay still; it is as simple as that. In 1994–95, Devon spent above its standard spending assessment; now it is told to spend at its SSA. We note in particular that the Secretary of State for Education said that this year's settlement was tough. The leaked memorandum, to which my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) referred, and which came out earlier this year, admitted that there would be profound cuts to children's education if capping went ahead.
After meticulous scrutiny of its budget, Devon county council found total cuts of £28 million and set the budget at £596.5 million. All it wants to do is put £4.4 million of that back into its budget. It wants to put back some of the £9 million that it needs to stand still in education terms.
This year, £3.8 million is needed just for the extra pupil numbers and £5.2 million is needed for the teachers' pay rise. As has been pointed out, this year Devon lost £8.6 million of its community grant from the Government for statutory services which is it is obliged by them to provide. As the hon. Member for Newbury (Mr. Rendel)

said, Devon has just under 1 per cent. of its spending in reserves and in December 1994 it was told by the auditor that that position should be remedied.
Devon is an efficient authority. Those are not my words; they are the words of the auditors for several years running. Where will the cuts fall? Some Conservative Members have said that we can find some savings in administration. Only 3 per cent. of Devon's education budget is being used for administration. In Somerset, the figure is nearly twice that. Devon is one of the lowest spending authorities in the country in terms of administration—it lies 97th out of 109 local authorities. This year's budget will reduce further the 3 per cent. of money spent on administration in the schools budget. Cuts must therefore inevitably fall on schools. That will mean larger classes and a reduction in the number of teachers. We already know that 150 teachers will be made redundant and a further 200 may have to go.
In addition, making teachers redundant sucks more money out of the education budget just to pay redundancy money. Teachers are not standing in front of classes teaching children so that they can be idle. It is a sort of educational set-aside.
The cuts know no friends. I have had communication with a local grant-maintained school—the only one in my constituency. It too is suffering a cut in its budget of £64,000 this year. I have received, as I am sure many other hon. Members have, hundreds of letters, many of them from schools, governors, parents and the pupils and students themselves. One letter that I read, which was addressed to another hon. Member, was sent by the Cathedral school of St. Mary in Plymouth. The head teacher, Mrs. Susan Walsh, says that her small primary school is losing £17,000 this year. She is having to cut a catalogue of things. Her own deputy head teacher, who is aged just 51, is being forced into voluntary retirement early this year. The head is having to teach a full timetable so that she can keep class numbers below 39. She ends her letter by saying:
Surely a caring listening government will put the welfare of schools as their first priority".
I agree with that and any Government who cared would do just that.
Why is Devon being capped and why is Somerset being allowed to go above the cap? Many similarities exist between the counties but there are also many differences. The case put by Devon was the most convincing and deserving that could have been put. My hon. Friend the Member for Holborn and St. Pancras said that, if Devon had been treated in the same way as Westminster council in relation to the SSA, it would be employing another 2,566 teachers this year, not sacking them.
Why has there been a difference? The reason is not in the factual evidence before us, so it must be a straightforward plain political decision. There is an essential difference and I know what it is. The reason for the difference is that Somerset Members, in presenting their arguments, lobbied and campaigned in a sensible, cross-party manner to get the cap raised.
I congratulate the Conservative Members from Somerset on working on a cross-party basis for the benefit of local people. In particular, I congratulate the hon. Member for Taunton (Mr. Nicholson) on his tireless campaign and I hope that he will join us in the Lobby tonight so that he can replicate the success in Somerset in Devon. The expenditure cap did not fit in either Devon or


Somerset. The difference is that the Somerset Tories were not prepared to wear it and in Devon the Tory Members saw the cap and put it on.
What about cross-party co-operation in Devon? The offer was there—the hon. Member for Teignbridge (Mr. Nicholls) is back with us. Tory councillors had the offer of joining the process of setting the budget, but they came into the budget meeting at the very last minute with what I can describe only as a back-of-an-envelope calculation, saying that the council could cut £1 million here, £1 million there and £2 million elsewhere.

Mr. Nicholls: Will the hon. Gentleman give way?

Mr. Jamieson: I am not giving way to the hon. Gentleman. He has spoken already and we have just a few minutes. He said that money should be cut from highways, from social services and from the matching European money. If the money had been cut from the 5a and 5h funds, we would have lost a further £1 million from European funding. A cross-party delegation had a meeting with the Under-Secretary of State for the Environment. The hon. Member for North Devon (Mr. Tyler) was there, so were Liberal Democrat and Labour councillors, but no Tory councillors or Tory Members were present.

Mr. Nicholls: rose—

Mr. Jamieson: Had the hon. Member for Teignbridge been there, he would have heard powerful arguments put by Geoff Rees of the Devon Association of Secondary Heads and Eric Howard of the Devon Association of Primary Teachers as to why the cap needed to be raised this year.

Mr. Nicholls: rose—

Mr. Jamieson: What has been the response of the Tory Members and the hon. Member for Teignbridge, who is trying to intervene? It has been a catalogue of confusion, contradiction and misinformation, surpassed only by the Secretary of State for the Environment this evening.
In a debate earlier this year and earlier today, the hon. Member for Teignbridge said that Devon had taken on another 718 staff this year. He omitted to say, however, that most of that staff were taken on by schools because they had extra numbers to fill. Many of them were taken on to meet the statutory obligations that Devon has for care in the community. That is where the extra people came from.
Tonight the matter is in the hands of Tory Members. Their vote could overthrow the cuts. A vote in the Lobby tonight could affect every budget in every school in the constituencies. Tory Members in Devon have been speaking in their own region in one way—

Madam Deputy Speaker (Dame Janet Fookes): Order. I am sorry but the hon. Gentleman has had his time.

Mr. Clive Betts: Last year in this Chamber, Sheffield was the only authority on which an order was placed and the Minister for Local Government, Housing and Urban Generation was at least partially helpful in raising the cap by £3 million. This year the city has had a lower cap set in real terms than last

year and the Government have given us no leeway. When I challenged the Secretary of State for the Environment earlier, all he could say was that that was due to problems of financing, which were Sheffield's own problem and which were caused by the high cost of borrowing in the past. He knows, however, that for the building of our facilities in Sheffield, which are used by hundreds of thousands of people annually, we had a good financial deal in place and that was undermined by the Allerdale judgment—a court case that was in no way related to the local authority.
Last year, we explained that position to Ministers and they accepted that the authority needed time until the court case was resolved to refinance those facilities. They therefore lifted the capping limit. I went to a meeting with the Minister for Local Government, Housing and Urban Regeneration along with colleagues from Sheffield city council a few weeks ago. The city treasurer explained to the Minister that as a result of the court case, he could not guarantee that the money from refinancing would be available for the authority to spend this year.
For the Secretary of State to say that the city would have £20 million extra this year, so it did not need to have its capping limit raised, was simply not correct. It is not what the city treasurer advised Ministers. It is not the case. For the Secretary of State to base a judgment on that fallacious information was extremely unfortunate. I hope that the Minister will correct it in his reply to the debate.
Sheffield is a low-spending authority. We have a standard spending assessment which is lower than the metropolitan average. We have expenditure of £747 per head. That is lower than the expenditure in cities of a similar size. We have a record of extremely good management in local government. That is the judgment of other people in local government, which I prefer to accept rather than that of Ministers.
In the early 1990s, in a poll of people in local government Sheffield came out as one of the best managed authorities. We have always had good reports from the district auditor. We invented and used cash limits before the Government had thought about them. We entered into partnership schemes with the private sector when Ministers were advising the private sector not to enter into them. We have always concentrated our expenditure on front-line services. That is why this year the council has done its best to protect education and social services. That protection will not be possible to sustain if the capping limit is not raised.
In the report "Paying the Piper" published by the Audit Commission, Sheffield came out second of all local authorities for the reductions that it had made in bureaucracy, administration and overheads, not merely in the past couple of years but since the mid-1980s. Indeed, since 1987 the city has cut 7,500 jobs. Some of those savings were beneficial in the sense that they brought about reductions in the costs of refuse collection. Yet we still have an excellent service. The cuts could be supported. I was not proud to be involved in other savings because they reduced local services to local people, contrary to the wishes of local electors expressed in local elections.
Sheffield has particular problems. The hon. Member for Sheffield, Hallam (Sir I. Patnick) rightly referred to the cost of the supertram, which will also affect Barnsley, as my hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham) has explained. The funding of


the supertram is absolute nonsense. The supertram is funded by central Government. The more that the Government spend, the less the council can spend on education and the lower the council tax is. That is crazy. I have to explain to people that their council tax goes down because of the funding of the tram that they can see running down the streets. That is a stupidity which even Ministers would find hard to explain to the electorate of Sheffield. I have certainly tried and failed. People look at me in blank amazement when I attempt to explain.
Let us take Sheffield's SSA for highways. When the streets were being dug up for the supertram, the Government left the monitors which count traffic flow in the same position. Of course, the monitors could not count any traffic because there was not any. That has cost the city council £800,000 in grant this year. That is a stupidity and Ministers know it. I have written to them three times and they have refused to do anything about it. They should be ashamed of a system which enables that to happen.
It is equally stupid that we are here today in the Chamber arguing about traffic counting and the detail of the financing of the supertram in Sheffield. It is nonsense that in a debate of less than three hours hon. Members will second-guess the views of hundreds of elected local councils throughout the country and the thousands of electors who went out to vote for them and substitute their views for local people's views.
I agree with the comments that were made by the right hon. Member for Shropshire, North (Mr. Biffen) at the beginning of the debate. The capping orders are a nonsense. They fundamentally undermine the democratic systems of Britain; they undermine local democracy; they bring into question the validity of local elections; they discourage people of quality and ability from standing for local government and remaining in it. That is something we try to avoid.
We are not debating capping only of the authorities in the capping orders. Everyone knows that the majority of other councils have set their budget within 1 per cent. of the capping limit that they have been given. It is effectively blanket capping of every local authority that we are debating.
Conservative Members said that the Audit Commission had examined the SSA system and given it a clean bill of health. That was not correct. The Audit Commission expressed many doubts about the SSA system. It said firmly that the system was for distributing grant between authorities, not for restricting expenditure and imposing caps. The Audit Commission has been clear in its opposition to the use of the SSA system in that way.
Nor are we talking about central Government expenditure tonight. The cap does not reduce central Government expenditure. All that it does is prevent the people of Sheffield, Barnsley, Newcastle, Norwich, Shropshire, Devon and all the other authorities from saying that they want to spend a little more of their council tax on local services, which are of benefit to them. For those reasons, I feel resentful this evening that Members of Parliament who do not live in my city and do not represent it will vote to impose the order and impose cuts on my constituents and the people of my city, who will have to suffer those cuts even though they did

not vote for them and do not want them. That is undemocratic. It is time that we got rid of this unjust and unfair system once and for all.

Mr. Eric Illsley: This has been a pitifully short debate, given the importance of the order to local government and in particular to those who will lose their job as a result of the vote. The debate has served to highlight yet again the Government's absolute control over local authority spending and their denial of local accountability and democracy. That denial of local accountability was brought into sharp focus on 5 May when the Conservative party was overwhelmingly rejected in the local elections. Yet the Government still come here today with a capping order which is against the wishes of both the electorate and a majority of the Members of Parliament who have spoken this evening.
The Government have no effective mandate for local government. Their policies have been rejected by an electorate who are sick and tired of cut after cut in local services and who are incensed at the cuts which are being imposed on education and social services, with the consequent sackings of teachers, increases in class sizes and closures of day centres and social services facilities. The Secretary of State has no support anywhere for his capping proposals, which are discredited, undemocratic and unacceptable.
The capping powers have been debated on several occasions. As I have been allowed only seven minutes to reply to the debate, I do not intend to rehearse the arguments today. I maintain that the capping powers are discredited and ridiculed. They create unaccountability time and time again. The Government have refused to allow democratically elected councils to put their budgets to the electorate. It is time that the Government lived up to the press speculation and announced the abolition of capping, which has been flagged up. As we know from the hon. Member for Rugby and Kenilworth (Mr. Pawsey), the aim of that might be to allow local authorities to increase their spending so that Conservative Members can say, "We told you so." The Government know that the reverse is the case. Most of the authorities that we are debating this evening are responsible, prudent authorities which have set responsible budgets.
Capping has increased the centralised control of local government finance. Now, 80 per cent. of local government funding is controlled by central Government. We have universal capping. We are debating only seven authorities this evening because most of the other authorities spent to the level of their cap. Most authorities now regard the capping level as the level to which they should spend.
The capping proposals are unfair. They are based on SSAs. I have spoken many times in the House on SSAs. They are a distortion of the needs of any local authority. The indicators are approximate. They are based on out-of-date information. They are discredited. They simply do not reflect need.
Last year, Barnsley was given a 7 per cent. increase in SSA, but then held at a spending level by capping. Even today, its capping level is only 0.5 per cent. above its SSA. The same problem applies to Newcastle. Its SSA gave it an extra £19 million of spending last year. It can spend only about £11 million of that. That is ridiculous.
The financial settlement this year has been extremely harsh. Local authorities were capped at 0.5 per cent. above their 1994–95 base budget. We can compare that to previous years. Hon. Members have referred to capping proposals of 12.5 per cent. above the SSA. There is a significant difference now in that SSAs and the capping regime are being used simply to cut services from local government.
Hon. Members from all parties have raised issues in relation to their own local authorities. I would like to emphasise one or two of the points that have been made and to make particular reference to the problems of the Supertram system, which affects Barnsley, my local authority, and Sheffield. Supertram displaces £1.3 million worth of Barnsley council services for a tram system which operates 20 miles away. How can that be fair? Barnsley has used up all its balances so it has reassessed its insurance cover and taken £700,000 from its insurance premiums to fund this year's settlement. The problems are not going to go away. Supertram will be there next year, as will the £10 million funding charges. Problems will recur and next year Barnsley will not be able to use balances or re-determine its insurance.
Hon. Members who represent Gloucestershire have referred to problems experienced by their council. We have heard, however, that the council tax could have been set at the same level as last year if the Gloucestershire budget had been approved. We have heard that Gloucestershire will be subject to a judicial review as a consequence of the cuts that it has had to make in funding for community care. Again, Gloucestershire, like Barnsley and Sheffield, has been required to make millions of pounds worth of cuts in previous years. For this year, Gloucestershire has had to made budget reductions of £22 million, yet the demand for community care has increased by 40 per cent.—all at a time when the authority is being referred to the courts.
In Newcastle, education and social services will be affected. Yet, under the budget which was proposed by the Newcastle authority, the council tax could have been reduced by £43. There will be cuts in the number of teachers employed by Newcastle. The library service will be affected and there will be cuts in the youth service and the money available for special educational needs.
Why has Devon been capped as opposed to Somerset—because Somerset had a better case than Devon in the Minister's office? Is that a consequence of all-party support? Should Conservative Members who represent Devon have accompanied Labour Members who represent Devon to have achieved a relaxation of their capping criteria? Is that why Somerset was preferred to Devon? The implications for Devon were well set out by my hon. Friend the Member for Plymouth, Devonport (Mr. Jamieson). He referred to problems in education, teachers' jobs and increased class sizes. He pointed out that administration costs in Devon were quite low. Devon has been treated unfairly.
The points made about Shropshire by the right hon. Member for Shropshire, North (Mr. Biffen) were relevant. It has had £6 million cut from its budget. Sheffield has problems because of the funding of Supertram and faces an absolutely ludicrous traffic situation. My hon. Friend the Member for Norwich, South (Mr. Garrett) made the point that a large day-time population causes particular problems for that authority.
I have made quite a rushed speech, but the main point, which, if anything, the Government should take on board, is that capping must be abolished.

The Minister for Local Government, Housing and Urban Regeneration (Mr. David Curry): Obviously, in such a short time, I cannot answer the detailed points raised in the debate, but I wish to answer some of the fundamental questions that have been asked. I shall start with the point that the hon. Member for Barnsley, Central (Mr. Illsley) has just made, which was also raised by my right hon. Friend the Member for Shropshire, North (Mr. Biffen), by my hon. Friends the Members for Ludlow (Mr. Gill) and for Rugby and Kenilworth (Mr. Pawsey) and by many other hon. Members: capping.
My right hon. Friend the Member for Shropshire, North said that it was at the heart of the debate, and he was right. We must be careful that we do not have that debate in too simplistic terms. There is sometimes a danger that the solution is seen as being a simple option. There is quite clearly an issue of the relationship between central and local government and the requirement of local decision-making; what one might call subsidiarity in its broader sense. My right hon. Friend mentioned Mr. Delors. If I may go a little further back, he would have been a Girondin rather than a Jacobin and I have no particular desire to play the Robespierre.
There is also a second question—

Mr. Dobson: He was decapitated. He was guillotined. [Laughter.]

Mr. Curry: The hon. Gentleman forgets what he did before all that happened. That is what counts in politics, is it not? There is a second issue which we must address [HON. MEMBERS: "He was capped."] No, that was de-capping, I believe. We must address a second issue seriously.
Any Government will always want to have in mind the economic consequences of expenditure which constitutes 25 per cent. of all public expenditure. It is quite legitimate to say, "Well, that does not matter. We can leave that entirely to local determination." If people want to say that, at least it is honest and reasonable, but I wonder whether Governments of any hue would not wish to have some mechanism by which, when economic circumstances required a particular form of management, they were able to bring that expenditure within their view. The argument must take place and we must be sure, when we have that argument, that we are confident that we want local decisions to take place.
Let me talk about a slightly perverse point. Opposition Members said that perhaps we could make local democracy function more effectively by introducing elections by thirds. Local government already has the ability to seek elections by thirds. The choice is with it. Do we, as part of a campaign to hand more responsibility to local government, impose on local government a particular mechanism of elections? There is a certain conundrum at the heart of that, which must be addressed. There is no point in doing something which is illiberal and, dirigiste, in the interests of a system that we regard as moving towards something which is more liberal.
I have addressed that issue because it is at the heart of the debate. There is another issue at the heart of the debate—

Mr. Rendel: indicated dissent.

Mr. Curry: It is no good the hon. Gentleman shaking his head. It is at the heart of the debate.
If local authorities say, "The present situation is unacceptable because we are capped and cannot raise our money locally," they must be confident that if the circumstances change and they can raise what they need locally—we can argue about the way in which local consent could be obtained for that—they do not immediately start using the Government as an alibi and say, "Of course, all this is happening not because it is what we positively want but because we have not been getting enough grant." There is no point in pretending. Those issues will arise, and there should be a mature and reflective debate on the whole subject.
Of course the area cost adjustment is a difficult issue, but it is not good enough simply to say, "Abolish it." There are differentials in the total cost of employing people, which have to be addressed across the spectrum of local government. The simple abolition of the adjustment would lead to utterly unmanageable changes in grant allocation throughout the system, not least in many of the local authorities run by the Opposition parties.
I believe that the hon. Member for Holborn and St. Pancras (Mr. Dobson) is being shortsighted and foolish in his constant derogatory commentary about the methods of distribution of Government grant. Whether he likes it or not, the method that delivers grant to Westminster is identical with that which delivers grant to many other local authorities, including Tower Hamlets and Hackney, which get more per capita than Westminster.
If the hon. Gentleman seeks to re-engineer that system specifically to do Westminster down, he will find himself in treacherous waters, defending to his leaders the consequences of the changes for some inner-city authorities. If he wants to take the charges for on-street parking away from Westminster, will he take from Bristol, Coventry and Plymouth the substantial revenues from their investments in city-centre property? There may be an argument for doing that, but he must be consistent and explain how he would do it. That, too, is at the heart of the debate.
Shropshire's standard spending assessment is £573 per head, and I must tell my hon. Friend the Member for Ludlow that 20 counties have lower SSAs, including Hampshire, Surrey, Oxfordshire, East Sussex and West Sussex, all of which receive the area cost adjustment. So there is a complexity in the system, and one must be careful not to make too rapid a judgment on it.
I recall that we had the same passage of arms with the hon. Member for Sheffield, Attercliffe (Mr. Betts) last year, and I must tell him that the figure of £20 million that we specified for refinancing is in the budget because Sheffield told us that it was sufficiently likely for the arrangement to be incorporated in its budget. We had to operate on the budget that Sheffield put before us.
The settlement is tough; we do not deny that. I hope that, in this rapid winding-up, I have acknowledged that it raises fundamental issues. The debate on it must take

place, but I appeal to the House to recognise that the settlement cannot be debated in simplistic terms, and that wider issues connected with the management of the economy, as well as with local democracy, are involved. If we address those, we shall do a service to our electors.
It being Seven o'clock, the Deputy Speker put the Question, pursuant to Order [9 June].
The House divided: Ayes 270, Noes 242.

Division No. 164]
[7.00 pm


AYES


Ainsworth, Peter (East Surrey)
Day, Stephen


Aitken, Rt Hon Jonathan
Deva, Nirj Joseph


Alexander, Richard
Devlin, Tim


Alison, Rt Hon Michael (Selby)
Dorrell, Rt Hon Stephen


Allason, Rupert (Torby)
Douglas-Hamilton, Lord James


Arness, David
Dover, Den


Arbuthnot, James
Duncan, Alan


Arnold, Jacques (Gravesham)
Duncan-Smith, Iain


Arnold, Sir Thomas (Hazel Grv)
Dunn, Bob


Ashby, David
Durant, Sir Anthony


Atkins, Robert
Dykes, Hugh


Atkinson, David (Bour'mouth E)
Eggar, Rt Hon Tim


Atkinson, Peter (Hexham)
Elletson, Harold


Baker, Nicholas (North Dorset)
Evans, David (Welwyn Hatfield)


Baldry, Tony
Evans, Jonathan (Brecon)


Banks, Matthew (Southport)
Evans, Nigel (Ribble Valley)


Bates, Michael
Evans, Roger (Monmouth)


Batiste, Spencer
Evennett, David


Bellingham, Henry
Faber, David


Bendall, Vivian
Fabricant, Michael


Beresford, Sir Paul
Fenner, Dame Peggy


Bonsor, Sir Nicholas
Field, Barry (Isle of Wight)


Booth, Hartley
Fishburn, Dudley


Boswell, Tim
Forman, Nigel


Bottomley, Peter (Eltham)
Forsyth, Rt Hon Michael (Stirling)


Bottomley, Rt Hon Virginia
Forth, Eric


Bowden, Sir Andrew
Fowler, Rt Hon Sir Norman


Bowis, John
Fox, Dr Liam (Woodspring)


Boyson, Rt Hon Sir Rhodes
Fox, Sir Marcus (Shipley)


Brandreth, Gyles
Freeman, Rt Hon Roger


Bright, Sir Graham
French, Douglas


Brooke, Rt Hon Peter
Gallie, Phil


Brown, M (Brigg & Cl'thorpes)
Gardiner, Sir George


Browning, Mrs Angela
Garnier, Edward


Bruce, Ian (Dorset)
Gillan, Cheryl


Budgen, Nicholas
Goodlad, Rt Hon Alastair


Burns, Simon
Goodson-Wickes, Dr Charles


Burt, Alistair
Gorman, Mrs Teresa


Butcher, John
Gorst, Sir John


Butterfill, John
Grant, Sir A (SW Cambs)


Carlisle, John (Luton North)
Greenway, Harry (Ealing N)


Carlisle, Sir Kenneth (Lincoln)
Greenway, John (Ryedale)


Carrington, Matthew
Gummer, Rt Hon John Selwyn


Carttiss, Michael
Hague, William


Cash, William
Hamilton, Rt Hon Sir Archibald


Churchill, Mr
Hamilton, Neil (Tatton)


Clappison, James
Hanley, Rt Hon Jeremy


Clark, Dr Michael (Rochford)
Hargreaves, Andrew


Clifton-Brown, Geoffrey
Harris, David


Coe, Sebastian
Haselhurst, Alan


Colvinn, Michael
Hawkins, Nick


Congdon, David
Hawksley, Warren


Conway, Derek
Hayes, Jerry


Coombs, Anthony (Wyre For'st)
Heald, Oliver


Coombs, Simon (Swindon)
Heathcoat-Amory, David


Cope, Rt Hon Sir John
Hendry, Charles


Cormack, Sir Patrick
Heseltine, Rt Hon Michael


Cran, James
Hicks, Robert


Currie, Mrs Edwina (S D'by'ire)
Higgins, Rt Hon Sir Terence


Curry, David (Skipton & Ripon)
Hogg, Rt Hon Douglas (G'tham)


Davies, Quentin (Stamford)
Horam, John


Davis, David (Boothferry)
Hordem, Rt Hon Sir Peter






Howard, Rt Hon Michael
Renton, Rt Hon Tim


Howarth, Alan (Strat'rd-on-A)
Richards, Rod


Howell, Sir Ralph (N Norfolk)
Riddick, Graham


Hughes, Robert G (Harrow W)
Robathan, Andrew


Hunt, Rt Hon David (Wirral W)
Roberts, Rt Hon Sir Wyn


Hunt, Sir John (Ravensbourne)
Robertson, Raymond (Ab'd'n S)


Hunter, Andrew
Robinson, Mark (Somerton)


Jackson, Robert (Wantage)
Roe, Mrs Marion (Broxbourne)


Jenkin, Bernard
Rowe, Andrew (Mid Kent)


Jessel, Toby
Rumbold, Rt Hon Dame Angela


Johnson Smith, Sir Geoffrey
Ryder, Rt Hon Richard


Jones, Gwilym (Cardiff N)
Sackville, Tom


Jones, Robert B (W Hertfdshr)
Sainsbury, Rt Hon Sir Timothy


Jopling, Rt Hon Michael
Scott, Rt Hon Sir Nicholas


King, Rt Hon Tom
Shaw, David (Dover)


Knapman, Roger
Shaw, Sir Giles (Pudsey)


Knight, Mrs Angela (Erewash)
Shephard, Rt Hon Gillian


Knight, Greg (Derby N)
Shepherd, Richard (Albridge)


Knight Dame Jill (Bir'mn E'st'n)
Sims, Roger


Knox, Sir David
Smith, Sir Dudley (Warwick)


Kynoch, George (Kincardine)
Smith, Tim (Beaconsfield)


Lait, Mrs Jacqui
Soames, Nicholas


Lamont, Rt Hon Norman
Spencer, Sir Derek


Lang, Rt Hon Ian
Spicer, Sir James (W Dorset)


Lawrence, Sir Ivan
Spicer, Michael (S Worcs)


Legg, Barry
Spink, Dr Robert


Leigh, Edward
Spring, Richard


Lennox-Boyd, Sir Mark
Sproat, lain


Lidington, David
Squire, Robin (Hornchurch)


Lightbown, David
Steen, Anthony


Lilley, Rt Hon Peter
Stephen, Michael


Lord, Michael
Stem, Michael


Luff, Peter
Streeter, Gary


Lyell, Rt Hon Sir Nicholas
Sumberg, David


MacGregor, Rt Hon John
Sweeney, Walter


MacKay, Andrew
Sykes, John


Maclean, David
Tapsell, Sir Peter


McLoughlin, Patrick
Taylor, John M (Solihull)


McNair-Wilson, Sir Patrick
Taylor, Sir Teddy (Southend, E)


Madel, Sir David
Temple-Morris, Peter


Maitland, Lady Olga
Thomason, Roy


Malone, Gerald
Thompson, Sir Donald (C'er V)


Mans, Keith
Thompson, Patrick (Norwich N)


Marland, Paul
Thornton, Sir Malcolm


Marlow, Tony
Townend, John (Bridlington)


Marshall, John (Hendon S)
Townsend, Cyril D (Bexl'yh'th)


Marshall, Sir Michael (Arundel)
Tracey, Richard


Martin, David (Portsmouth S)
Tredinnick, David


Mates, Michael
Trend, Michael


Mawhinney, Rt Hon Dr Brian
Twinn, Dr Ian


Mellor, Rt Hon David
Vaughan, Sir Gerard


Merchant, Piers
Waldegrave, Rt Hon William


Mitchell, Andrew (Gedling)
Walden, George


Mitchell, Sir David (NW Hants)
Walker, Bill (N Tayside)


Moate, Sir Roger
Waller, Gary


Needham, Rt Hon Richard
Ward, John


Neubert, Sir Michael
Wardle, Charles (Bexhill)


Newton, Rt Hon Tony
Waterson, Nigel


Nicholls, Patrick
Watts, John


Nicholson, David (Taunton)
Wells, Bowen


Nicholson, Emma (Devon West)
Whitney, Ray


Norris, Steve
Widdecombe, Ann


Onslow, Rt Hon Sir Cranley
Wiggin, Sir Jerry


Oppenheim, Phillip
Wilkinson, John


Ottaway, Richard
Willetts, David


Page, Richard
Wilshire, David


Patnick, Sir Irvine
Winterton, Mrs Ann (Congleton)


Patten, Rt Hon John
Wolfson, Mark


Pawsey, James
Wood, Timothy


Peacock, Mrs Elizabeth
Yeo, Tim


Pickles, Eric
Young, Rt Hon Sir George


Porter, Barry (Wirral S)



Powell, William (Corby)
Tellers for the Ayes:


Rathbone, Tim
Mr. Sydney Chapman and


Redwood, Rt Hon John
Mr. Timothy Kirkhope.





NOES


Abbott, Ms Diane
Field, Frank (Birkenhead)


Adams, Mrs Irene
Foster, Rt Hon Derek


Ainger, Nick
Foster, Don (Bath)


Allen, Graham
Foulkes, George


Alton, David
Fraser, John


Anderson, Donald (Swansea E)
Fyfe, Maria


Anderson, Ms Janet (Ros'dale)
Galloway, George


Armstrong, Hilary
Gapes, Mike


Ashdown, Rt Hon Paddy
Garrett, John


Ashton Joe
George, Bruce


Banks, Tony (Newham NW)
Gerrard, Neil


Barnes, Harry
Gilbert, Rt Hon Dr John


Battle, John
Gill, Christopher


Bayley, Hugh
Godsiff, Roger


Beith, Rt Hon A J
Grant, Bernie (Tottenham)


Bell, Stuart
Griffiths, Nigel (Edinburgh S)


Benn, Rt Hon Tony
Griffiths, Win (Bridgend)


Bennett, Andrew F
Grocott, Bruce


Benton, Joe
Gunnell, John


Bermingham, Gerald
Hain, Peter


Berry, Roger
Hall, Mike


Betts, Clive
Hanson, David


Biffen, Rt Hon John
Hardy, Peter


Blair, Rt Hon Tony
Harman, Ms Harriet


Blunkett David
Harvey, Nick


Bradley, Keith
Henderson, Doug


Bray, Dr Jeremy
Heppell, John


Brown, Gordon (Dunfermline E)
Hill, Keith (Streatham)


Brown, N (N'c'tle upon Tyne E)
Hinchliffe, David


Burden,Richard
Hodge, Margaret


Caborn, Richard
Hoey, Kate


Callaghan, Jim
Hogg, Norman (Cumbernauld)


Campbell, Mrs Anne (C'bridge)
Hood, Jimmy


Campbell, Ronnie (Blyth V)
Hoon, Geoffrey


Campbell-Savours, D N
Howarth, George (Knowsley North)


Cann, Jamie
Howells, Dr. Kim (Pontypridd)


Chidgey, David
Hoyle, Doug


Church, Judith
Hughes, Kevin (Doncaster N)


Clapham, Michael
Hughes, Robert (Aberdeen N)


Clarke, Eric (Midlothian)
Hutton, John


Clarke, Tom (Monklands W)
Illsley, Eric


Clwyd, Mrs Ann
Ingram, Adam


Coffey, Ann
Jackson, Glenda (H'stead)


Cohen, Harry
Jackson, Helen (Shef'ld, H)


Cook, Frank (Stockton N)
Jamieson, David


Cook, Robin (Livingston)
Janner, Greville


Corbett, Robin
Jones, Jon Owen (Cardiff C)


Corbyn, Jeremy
Jones, Lynne (B'ham S O)


Corston, Jean
Jones, Martyn (Clwyd, SW)


Cousins, Jim
Jones, Nigel (Cheltenham)


Cox, Tom
Jowell, Tessa


Cummings, John
Keen, Alan


Cunliffe, Lawrence
Kennedy, Charles (Ross,C&S)


Cunningham, Jim (Covy SE)
Kennedy, Jane (Lpool Brdgn)


Darling, Alistair
Khabra, Piara S


Davidson, Ian
Kilfoyle, Peter


Davies, Bryan (Oldtham C'tral)
Lestor, Joan (Eccles)


Davies, Rt Hon Denzil (Llanelli)
Lewis, Terry


Davies, Ron (Caerphilly)
Liddell, Mrs Helen


Davis, Terry (B'ham, H'dge H'l)
Litherland, Robert


Denham, John
Livingstone, Ken


Dewar, Donald
Lloyd, Tony (Stretford)


Dixon, Don
Llwyd, Elfyn


Dobson, Frank
Loyden, Eddie


Donohoe, Brian H
Lynne, Ms Liz


Dowd, Jim
McAllion, John


Dunnachie, Jimmy
McAvoy, Thomas


Dunwoody, Mrs Gwyneth
McCartney, Ian


Eagle, Ms Angela
Macdonald, Calum


Eastham, Ken
McKelvey, William


Etherington, Bill
McLeish, Henry


Evans, John (St Helens N)
Maclennan, Robert


Fatehett, Derek
McMaster, Gordon


Faulds, Andrew
McNamara, Kevin






MacShane, Denis
Prentice, Bridget (Lew'm E)


Madden, Max
Prentice, Gordon (Pendle)


Maddock, Diana
Prescott, Rt Hon John


Mahon, Alice
Primarolo, Dawn


Mandelson, Peter
Purchase, Ken


Marek,Dr John
Quin, Ms Joyce


Marshall, Jim (Leicester, S)
Radice, Giles


Martin, Michael J (Springburn)
Randall, Stuart


Martlew, Eric
Raynsford, Nick


Maxton, John
Rendel, David


Meacher, Michael
Robertson, George (Hamilton)


Meale, Alan
Robinson, Geoffrey (Co'try NW)


Michael, Alun
Roche, Mrs Barbara


Michie, Bill (Sheffield Heeley)
Rogers, Allan


Milburn, Alan
Rooker, Jeff


Miller, Andrew
Rooney, Terry


Mitchell, Austin (Gt Grimsby)
Ross, Ernie (Dundee W)


Moonie, Dr Lewis
Ruddock, Joan


Morgan, Rhodri
Sedgemore, Brian


Morley, Elliot
Sheerman, Barry


Morris, Rt Hon John (Aberavon)
Short, Clare


Mowlam, Marjorie
Simpson, Alan


Mudie, George
Skinner, Dennis


Mullin, Chris
Smith, Andrew (Oxford E)


Oakes, Rt Hon Gordon
Smith, Llew (Blaenau Gwent)


O'Brien, Mike (N W'kshire)
Soley, Clive


O'Brien, William (Normanton)
Spellar, John


O'Hara, Edward
Squire, Rachel (Dunfermline W)


Olner, Bill
Steinberg, Gerry


O'Neill, Martin
Stevenson, George


Orme, Rt Hon Stanley
Stott, Roger


Patchett, Terry
Strang, Dr. Gavin


Pearson, Ian
Straw, Jack


Pendry, Tom
Sutcliffe, Gerry


Pickthall, Colin
Taylor, Mrs Ann (Dewsbury)


Pike, Peter L
Taylor, Matthew (Truro)


Pope, Greg
Thompson, Jack (Wansbeck)


Powell, Ray (Ogmore)
Timms, Stephen





 Tipping, Paddy
Williams, Rt Hon Alan (SW'n W)


Turner, Dennis
Williams, Alan W (Carmarthen)


Tyler, Paul
Wilson, Brian


Vaz, Keith
Winnick, David


Walker, Rt Hon Sir Harold
Wray, Jimmy


Walley, Joan
Wright Dr Tony


Wardell, Gareth (Gower)
Young, David (Bolton SE)


Wareing, Robert N



Watson, Mike
Tellers for the Noes:


Wicks, Malcolm
Mr. Robert Ainsworth and


Wigley, Dafydd
Mr. Stephen Byers.

Question accordingly agreed to.

Resolved,
That the draft Council Tax Limitation (England) (Maximum Amounts) Order 1995, which was laid before this House on 12th June, be approved.

EUROPEAN COMMUNITY DOCUMENTS

Motion made, and Question put forthwith pursuant to Standing Order No. 102(9) (European Standing Committees),

ECONOMIC POLICIES (EUROPEAN COMMUNITY)

That this House takes note of the unnumbered Explanatory Memorandum submitted by HM Treasury on 6th June 1995, relating to the Commission's Recommendation for the Broad Guidelines of the Economic Policies of the Member States and the Community; and agrees with the Government that the emphasis on permanently low inflation and sound public finances, combined with structural measures to tackle the problem of unemployment, is to be welcomed.—[Dr. Liam Fox.]
Question agreed to.

Caribbean

Motion made, and Question proposed, That this House do now adjourn.—[Dr. Liam Fox.]

Sir Thomas Arnold: I am grateful for this opportunity to raise British policy towards the Caribbean. I shall focus on three issues this evening: first, the continuing problem of Cuba, not least in the light of legislation that is going through the United States Congress; secondly, Britain's constitutional relationship with the five dependent territories; and, thirdly, the difficulties that are clearly apparent with the export of bananas.
Before I deal with each of those issues in detail, I wish to propose an over-arching theme to my hon. Friend the Under-Secretary. The Caribbean covers a wide area. With the exception of Cuba, the population of most of the countries is small. Those countries are fragile and often find themselves in difficulty. They clearly need a lot of help and guidance. There is an overriding need for stability in the region. Many of the issues are complex and that complexity often leads to complications of some kind, as my hon. Friend knows only too well. Stability in the modern world does not mean a quiet life, even in the Caribbean, and the image that most people have of the Caribbean is far removed from the reality with which local residents must deal on a day-to-day basis. Stability therefore means a lot of hard work for those engaged in framing, executing and implementing policy. I urge my hon. Friend to promote a policy aimed at stability because I have doubts about the present policy, particularly with regard to the dependent territories, with which I shall deal later in my speech.
I draw the House's attention once again to Cuba, particularly the legislation that is going through the American Congress, which I regard as a retrograde step. That legislation is, I understand, making steady progress, although we cannot be sure exactly what form it will take by the time it emerges, or what the attitude of the United States Administration will be in the event of the legislation passing through Congress.
Before I go further, I wish to draw the House's attention to the declaration that I made in the Register of Members' Interests and make it clear that my host in Havana was a leading British business man, Mr. Michael Ashcroft, who is a keen supporter of the Cuban reform programme and who is engaged in business in Cuba.
On the subject of British business men in Cuba, I was extremely pleased to learn that British-American Tobacco and its chairman, Sir Patrick Sheehy, are now heavily engaged in investment in the Cuban economy. On a matter of more long-standing activity in Cuba, I should like to say how grateful I am personally for all the help and advice that I have been given by Mr. Nicholas Freeman, who has supported his Cuban business through good and difficult times, and who is arguably this country's foremost importer of Cuban cigars.
It is vital that the United States, in particular, should show a greater understanding of some of the issues involved in Cuba. I am a keen supporter of the reform process, and support just as keenly doing everything possible to improve human rights in Cuba. However, I doubt whether those two goals will be furthered in any

meaningful way by the legislation currently before the US Congress; on the contrary, that legislation is likely to make life much more difficult. For one thing, it appears to have little flexibility. It has no end date. Obviously, the provisions regarding expropriation and compensation can be regarded as a retrograde step because they open the basis of expropriation and compensation to much wider actions than have been envisaged historically.
I was very pleased that the European Commission, in the figure of Sir Leon Brittan, made strenuous representations to the United States Government at an early stage. On several occasions, Sir Leon drew attention to the difficulties that the legislation was likely to cause European Community countries. He said that he believed that the new legislation, if enacted and implemented, might lead to legal chaos by extending US jurisdiction to possible, and as yet unregistered, property claims by US citizens who have held Cuban citizenship at the moment of compensation.
Sir Leon said:
I think that these collective provisions will interfere with European Union companies and individuals doing business in Cuba, to such an extent that a negative spill-over into the overall transatlantic relationship appears unavoidable. I also think that the approach taken in this legislation would not help a peaceful and orderly transition towards democracy in Cuba.
I agree with him about that.
I wish to draw the attention of the House to a statement issued by Mr. David Jessop, executive director of the Caribbean Council for Europe, in the US recently, in which he said:
Attempts to prohibit the entry into the US of sugars, syrups and molasses from third countries unless it is certified that such products will not be imported from Cuba
are to be deprecated. He said:
The European Union and individual member states have already indicated that such measures violate international law, would be challenged under WTO rules and would lead to retaliation. In this and other contexts the bill runs counter to the US approach to free trade.
I strongly agree with Mr. Jessop about that. I hope that, even at this late stage, the United States Congress and then the United States Administration will reconsider before going ahead with that further tightening of the United States' embargo.
Cuba, with a population of 10 million, is such an important entity in Caribbean terms that instability in respect of Cuba only helps to promote a feeling of uncertainty and instability throughout the region. All of us, including the United States, should work towards a solution to the problem of Cuba. We know that it is a difficult one in terms of the United States. We know that it engenders very high, passionate feelings, not least in Florida and in Miami. However, far from intensifying difficulties, surely the sensible approach is to try to persuade the Cuban Government to speed up the process of reform, to do more in respect of human rights and gradually to bring about an improvement so that there can be greater confidence and then, using those confidence-building measures, to promote an understanding between the United States and Cuba, which could lead to the dismantling of the present legislation and the lifting of the embargo.
I hope that my hon. Friend the Under-Secretary will be able to say, in this short debate, what the Government are doing to further the representations that were made earlier


by the European Commission and, I believe, by officials from the Department of Trade and Industry, especially in Washington this year.
Let me move on to discuss the position of the dependent territories. I am not an expert in the matters to which I shall refer, but I have followed developments in the dependent territories and I feel a certain unease. All is not well. I feel that so strongly that I urge my hon. Friend to consider carefully—and perhaps not give me an answer tonight—whether the time has come to set up a further inquiry to consider the relationship of our Government with the dependent territories, including the constitutional position and our attitude to the possibility of further political reform.
I have taken a long interest, in the House, in the position of dependent territories. Indeed, I instituted an Adjournment debate about the Falkland Islands and other dependent territories as long ago as 1982. Given the problems of the Caribbean, the five territories for which we are responsible require more understanding than they are receiving at present. One of the complaints is that the secretariat in Barbados has distanced the dependent territories even further from London. On this reading, the secretariat is too bureaucratic, cautious and slow. I do not know how much weight to give to that criticism, but I suspect that there is some truth in it. I hope that my hon. Friend will comment on that point this evening and perhaps reflect on it further in due course.
The Government's policy is to promote self-sufficiency, but that clearly carries with it some considerable costs for the local governments, chief ministers and others as well as for our Government. The administration costs of the dependent territories are not negligible. In answer to a recent parliamentary question, I was told that those costs were about £20 million per year. We must consider that cost carefully in terms of value for money and whether our relationships are exactly as we would wish.
There is a feeling that the governors should consult the chief ministers about reserve powers more often than they appear to do. The chief ministers are not saying that those reserve powers should not exist, or that they should not be used if circumstances warrant it; however, they would like to have more say in how some of those powers are exercised. If we are to be creative and forward-looking and try to establish sensible arrangements that will take us into the next century in respect of the territories, we should establish an inquiry to examine the situation.
I shall not say what form I think that inquiry should take; the Government can decide perfectly well whether it should be a royal commission or something less grand. Perhaps a more informal inquiry would be appropriate. After all, what is sensible in one dependent territory may not necessarily be sensible in another.
What is interesting about the dependent territories in the Caribbean is that there is no great demand for independence. Therefore, we have to find ways and means, short of independence, of meeting the legitimate aspirations of the islands to govern themselves while at the same time remaining under the protection of the Crown and all that that affords.
I mentioned earlier the need for stability while recognising the problems of the islands. I think that those problems can be summed up in one word—jobs. The

islands need jobs, jobs and more jobs. Although some of the larger investors, such as Cable and Wireless, should be welcomed and are important and significant, the overall employment picture remains difficult. Unless that problem is addressed, there will be no stability in the Caribbean.
The Caribbean continues to face real problems with illegal drugs. That should concern us greatly. I was certainly appalled to hear—I accept that it is only a rumour—that voices in the Treasury are suggesting that we should move the dependent territories towards independence on public expenditure grounds. I think that that would be a very unwise step, given what we know and what the Governments of the dependent territories, including the chief ministers, know about the difficulties that they face with regard to the importation of illegal drugs and the flow of those drugs through the territories.
Banking in the dependent territories is something of a hotch-potch. Different arrangements are in place in different territories, although that is not a bad thing in itself. The whole business needs greater clarity. Time is passing, and although I understand the Government's desire to ensure that things are done properly and that there are no grounds for believing that money laundering, for example, is taking place, more work needs to be done as soon as possible.
The time has come for us to make up our minds about the dependent territories and their form of government. What should their future status be? What relationship should they have with Whitehall? It is fair to say that Ministers have been repeating a certain mantra for some time, and fresh thinking is required because the problems to which I have referred will not go away. There is some uneasiness and a feeling that a new relationship needs to be developed.
That brings me to the difficult issue of the regime for bananas. I have had correspondence and briefing papers from the Caribbean Banana Exporters Association about the "banana crisis", saying:
This is a time of great anxiety for the Caribbean—and particularly for those states whose economies are largely dependent on their banana exports to Europe. Their traditional market in the European Union—essentially in the United Kingdom—is under serious threat from political campaigns both in the USA and within the European Union. For some, notably the Windward Islands, this could mean the loss of almost 60 per cent. of all their export income.
The association explains that Germany and some other member states, which hitherto had an unrestricted market, were opposed to the present system from the start and continues:
More recently, at the behest of Chiquita, the world's leading banana trader, the USA launched proceedings against the European Union, threatening trade sanctions unless changes were made which would increase Chiquita's market share. This increase would in practice be at the expense of the Caribbean.
Last week the new European Commissioner for Agriculture, Dr. Fischler, on a visit to the USA, made the astonishing public statement that he personally did not like the EU banana regime and would be seeking a mandate from the Agriculture Council in July to negotiate changes to it with the USA. He mentioned in particular the need to review the quota and other mechanisms which currently protect Caribbean and other African Caribbean and Pacific imports.
The issue is extremely serious and I hope that my hon. Friend will make it clear this evening that the Government strongly support Caribbean interests in this matter. There is still a potential blocking minority under the European


Union voting system, so we can stand firm by the present arrangements. In essence, I hope that the Government will give every signal that they intend to stand firm, in particular to avoid damaging arbitrary increases in the quota or changes to the preferential licensing arrangements.
I referred to the fragility of some of the Caribbean economies and the problems in respect of bananas illustrate that only too well. There are those who say that the situation is potentially dangerous and that the current United States threat will promote instability, further uncertainty and difficulties all round.
I recognise that some issues go way beyond the present position and touch on the whole nature of the European Community post-Lomé IV and the thinking on and relationship with the Caribbean region. Current thinking appears to favour specific regional agreements in which the Caribbean and central America will be treated in much the same way through advanced co-operation agreements. There are some difficulties with that approach. Above all, it is essential that whatever is decided should take account of the different sizes of the Caribbean economies.
France and Germany have already begun to consider post-Lomé IV relations with the Caribbean. I should be grateful if my hon. Friend could say what work is in hand with regard to Britain's interests in the matter and what line he is taking in Brussels. After all, future policy for the Caribbean will be decided, I suspect, as much in Brussels as it will be here and in other EC capitals. That is the nature of the relationship into which we have entered with our EU colleagues. I should be grateful if my hon. Friend will outline the manner in which he proposes to negotiate in the Community on these problems. The difficulties of the banana-producing countries are real and urgent, and solutions are necessary.
To conclude, let me go back to the beginning and say that a policy that produces stability, however paradoxical it may sound, will be an active policy. Implementation will require a good deal of thought and care, not least because of the complexity of the issues.
I recognise that the difficulties surrounding Cuba are formidable, but if we do not face up to them, and if Britain does not have a clear, coherent policy, that will only magnify some of the other problems in the region. We have already seen what the Cuban refugee problem can mean in the case of the dependent territory of the Cayman Islands. My hon. Friend may be able to say a word about developments in that regard. I understand that the situation is now much better; I would be grateful for my hon. Friend's confirmation of that.
Above all, I should like to make it clear that I would like to see the Caribbean in an optimistic, settled frame of mind, with some of the problems to which I have referred this evening being attenuated by a mixture of wise policy and constructive, good government. The region needs help. for the reasons I have given. I know that the House and the Government want to do everything possible to bring that about.

The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Tony Baldry): I am grateful to my hon. Friend the Member for Hazel Grove (Sir T. Arnold) for initiating this debate. The Caribbean is a diverse and exciting region, and we take it

very seriously. After all, we have long-standing friendships with all the Caribbean, and a quarter of the members of the Commonwealth are to be found there.
The Caribbean is a significant market, too. Taking trade and investment as a whole, the Caribbean is a large market for the United Kingdom, accounting for £1 billion of visible exports last year. Non-oil exports have risen from £400 million a few years ago to £700 million last year, and we have an estimated £2.7 billion-worth of investment in the region.
In addition to our trade links, we maintain close links in other ways with all the countries of the region—the human links represented by Caribbean communities in this country, for instance. There are continuing close associations in many areas such as law and education, and we give and receive close support to and from our Commonwealth colleagues in the Caribbean.
My hon. Friend the Member for Hertford and Stortford (Mr. Wells), chairman of the all-party Caribbean group, who is also present, could testify to the fact that the Commonwealth countries in the Caribbean support us. I hope that we support them as well.
I shall say a little more about bananas later, but I think that Commonwealth colleagues would recognise that we have been in the forefront of seeking, in the EU, to represent their best interests when it comes to commodities such as rum; and we have been staunch defenders of the EU banana regime, not least because we see it as a way of helping to represent not just our interests but those of our friends in the Caribbean.
I am glad to say that our Commonwealth colleagues there give us support, too. We received close support from them recently in the United Nations. Two recent examples are the extension of the nuclear non-proliferation treaty and the CARICOM contribution to the solution of the Haiti crisis.
Traditionally, we have strong links with many countries in the Caribbean. Although they have mainly been with the Anglophone parts of the Caribbean, we are understandably paying increasing attention to the Hispanic-speaking countries.

Ms Diane Abbott: The Minister must be aware of the feeling in the Caribbean nations that, as Britain has become more involved with new friends in the European Union, it has become less concerned about the weakening of links with old friends in the Caribbean. I hope that he will accept that people of Caribbean origin in this country are very worried about Her Majesty's Government's policy on the Caribbean, and want the Government to use their influence in the United States to ensure that its Cuban policy is driven less by domestic electoral concerns and more by concern about the stability of the region.

Mr. Baldry: I think that the hon. Lady is mistaken. We have a close and continuing relationship with the Caribbean, and I do not believe that a single Caribbean country feels that Britain's attention to the region has lessened. Indeed, I think that most Caribbean Commonwealth colleagues recognise that Britain is unique in being a member of both the Commonwealth and the European Union. On many occasions—the recent negotiations on rum provide a straightforward example—that has enabled us to articulate the best interests of Caribbean Commonwealth colleagues in the European Union.
I shall deal with Cuba shortly. I do not think that hon. Members are likely to fall out on that subject, but I also do not think that any suggestion that Britain has other than a close and continuing friendship with the whole Caribbean region can be sustained. As my hon. Friend said, we still have some continuing and specific responsibilities for our five dependent territories in the region: Anguilla, the British Virgin islands, the Cayman islands, Montserrat and the Turks and Caicos islands.
My hon. Friend raised three specific issues. The first was Cuba. The situation in Cuba is changing—for the better, we hope. A number of useful visits have been made by, for instance, my hon. Friend the Parliamentary Under-Secretary of State for Trade and Technology. That was a welcome first visit. We hope that economic reform in Cuba will continue; we also hope that political relations will progress in tandem with our improving trade and investment links. While we have made some headway, we still have our differences, human rights and fundamental freedoms being areas of particular concern; but, despite those difficulties, we are making progress, and I hope that that encouraging trend will continue.
Because we do not believe in the desirability of isolating Cuba, we cannot share the views that lie behind the Helms-Burton legislation recently introduced in the United States Congress. Unfortunately, the hon. Member for Hackney, North and Stoke Newington (Ms Abbott), who asked about Cuba, has disappeared; if she were here, I hope that she would be reassured to learn that we are strongly opposed to the extra-territorial provisions of that legislation, and have supported the efforts of Sir Leon Brittan to bring home to the American Government the damage that the legislation could cause to world trade. The response of the US Administration clearly reflects the representations that we and our other partners have made.
As I said earlier, although our traditional links have been with the Anglophone part of the Caribbean, we are very conscious of the increasing importance of the Hispanic-speaking countries. For that reason, we not only pay more attention to Cuba, but—I am glad to say—have decided to reopen our embassy in the Dominican Republic.
I pay tribute to the sterling efforts of our honorary consul in Santo Domingo, Maureen Tejada, who has maintained our links with the country and facilitated the efforts of United Kingdom business men there, as well as looking after the increasing number of British tourists. We all owe her a great debt, and I am delighted that we shall soon send an ambassador to the Dominican Republic again.
I also pay tribute to Dr. Ian Court, our other honorary consul of note in the region—in San Juan, Puerto Rico—who has contributed significantly to the upsurge in our commercial relations with Puerto Rico.
I would also like to mention the work done by Margaret Guercy, our vice-consul in Port au Prince, who is currently in the United Kingdom on a well-deserved visit after the difficult times which Haiti went through last summer. We have recently sponsored an important visit to London by a leading figure in the new political scene in Haiti. We hope that the elections that are due to take place there will soon help to improve stability, because, as my hon. Friend said, what we all wish to see in the Caribbean region as a whole is stability.
The Caribbean dependent territories are all specific and all different. Taking them from west to east, the Cayman Islands has long since been weaned off direct aid and now has a higher GDP per head than Hong Kong or Singapore. However, the Turks and Caicos Islands are still dependent on British aid, although they have recently made considerable strides through the development of tourism and offshore finance.
As I will make clear in a moment, it is important that offshore finance should be properly regulated, or the results may prove counter-productive, as happened in the past. The situation in the Turks and Caicos is now much healthier than it was in the late 1980s, when, as some hon. Members may remember, there were a number of unfortunate difficulties.
Offshore finance and tourism have also been the making of the British Virgin Islands, which is now broadly self-sufficient and no longer reliant on significant United Kingdom aid. I take this opportunity to pay tribute to the Government of the British Virgin Islands, and in particular to the late Chief Minister, Lavity Stoutt, who sadly died recently and who did so much to encourage the development of his territory.
Anguilla has a population of only 9,000 and although it has also been successful, small islands such as these have special problems in providing essential Government services and maintaining the infrastructure for their development. That applies also to Montserrat, where our aid programme is making an important contribution.
By providing manpower and expertise in areas such as the budget, auditing, police and customs, we can improve the quality of government in the dependent territories. This is essential, because the future of the territories, whether they decide to move to independence or not—and we have made it clear that it is their decision—will inevitably depend on their being well run.
My hon. Friend asked whether I might undertake a review of the dependent territories. I think that the definitive text on our approach to the dependent territories was given by my right hon. Friend the Member for Enfield, North (Mr. Eggar), one of my predecessors as Under-Secretary of State, who, in December 1987, said in reply to a written question:
Following the concern expressed within the Commonwealth about the security of small states, and the suspension of ministerial government in the Turks and Caicos Islands, we have conducted a review of policy towards our five Caribbean dependent territories and Bermuda. We did so in the light of our commitment to the principle of self-determination and our determination to live up to our obligations under the United Nations charter, and our responsibilities for the good government and development of the dependent territories.
The review concluded that we should not seek in any way to influence opinion in the territories on the question of independence. We would not urge them to consider moving to independence, but we remain ready to respond positively when this is the clearly and constitutionally expressed wish of the people.
That is still exactly our position today.
My right hon. Friend continued:
As a result of the review, we are, however, implementing a number of administrative measures to improve the effectiveness with which we discharge our obligations to ensure the good administration, and economic and social development of the dependent territories. The reasonable needs of the dependent territories will continue, as before, to be a first charge on United Kingdom aid funds."—[Official Report, 16 December 1987; Vol. 124, c. 574.]


We have since then sought to make a number of changes to improve our relations with the dependent territories. For example, a little while ago, we instituted a dependent territories ministerial group. It is a ministerial group that meets regularly twice a year to discuss developments in the territories. A number of ministerial colleagues who are members of the group have visited the Caribbean and take an active interest in the dependent territories.
For example, in April my hon. and learned Friend the Solicitor-General attended a meeting of the Attorneys-General of the five Caribbean territories and of Bermuda; and my hon. Friend the Parliamentary Secretary to the Lord Chancellor's Department has recently been to Montserrat and Anguilla to examine some of the problems and requirements of the judicial system there.
As has been said, we also set up a regional secretariat for the Caribbean dependent territories based in Bridgetown alongside the British development division in the Caribbean. The secretariat concluded formal agreements with the majority of the Caribbean dependent territories to ensure that our aid is well planned and properly spent, and that it achieves value for money.
My hon. Friend the Member for Hazel Grove suggested that the secretariat has tended to increase the administrative distance between London and the dependent territories. Having had the opportunity to visit all the Caribbean dependent territories and the regional secretariat in Bridgetown, I am bound to say that I cannot accept that suggestion.
I pay close attention to the maintenance—of direct and close links with Chief Ministers. Last October, I attended the annual meeting in Montserrat of Chief Ministers and Governors. At the end of this month—very shortly—I hope to see many of the Chief Ministers again in London.
In connection with that visit, we have encouraged the Commonwealth Development Corporation to organise an investment seminar, which I hope will help some of the dependent territories in their search for inward investment. I also intend to go to Brussels with the Chief Ministers and Governors to seek greater support from the European Union for our dependent territories in the Caribbean.
The Government have paid and continue to pay close attention to the needs of the dependent territories. I take this opportunity to thank the Governors and the heads of regional secretariats for their efforts. I also pay tribute to the work being done by Chief Ministers and others within the dependent territories to ensure the continuing prosperity of their own territories. However, we shall, of course, continue to ensure that our international obligations are adequately discharged at a reasonable cost to the British taxpayer, and that the contingent liabilities associated with these territories do not increase.
There are no plans to change the constitutional relationship between the Government and the Caribbean dependent territories. It is certainly not in the interests of good government to contemplate a further devolution of powers to Caribbean dependent territories. That would leave us with full responsibility, but without the power to discharge that responsibility properly.
My hon. Friend mentioned reserve powers. There is an enormous amount of misunderstanding about these powers, which are, by definition, powers in reserve for

the Governor to use if the Government of the dependent territory involved do not discharge their responsibilities properly. There should be no need to discuss the reserve powers with the Governor if a territory has been properly governed and run.
Of course, from time to time the dependent territories have problems that are wholly outside their control. My hon. Friend mentioned the problem of illegal migration. Two of the dependent territories have recently been affected by serious influxes of economic migrants.
Last summer, the Cayman Islands received almost 1,200 illegal immigrants from Cuba within a matter of days. That figure must be put against a resident population of only 30,000. I am glad that, as a result of the intense and humane efforts of the Governor and the Government of the Cayman Islands, and with the help of our partners in the United States, the figure has subsided significantly. Indeed, I think that almost all the economic migrants have left and gone elsewhere to settle.
I pay tribute to everyone in the Cayman Islands who helped to deal with that extremely difficult human problem sympathetically and in a humane way. It is a matter of some note that one could have had that influx of migrants without it attracting any press attention here or elsewhere, so well was it dealt with.
In the Turks and Caicos Islands, there have been several waves of illegal migration from Haiti. Just after Easter, we took action again, with the help of our United States friends, to try to curb the latest flow, but as long as conditions in Cuba and Haiti remain difficult, the potential problem is likely to remain.
The last substantive issue that my hon. Friend mentioned was that of bananas. Let me make it absolutely clear to him that we have taken, and will continue to take, an active role on that issue in Brussels and in Washington. It is an important issue. I held a meeting with the leaders of the four Windward Island countries mainly concerned, when I was in the Caribbean to attend the biennial conference of our heads of mission earlier this year. The Windward Governments have accepted the recommendations of a study funded with British aid money, which sets out a comprehensive strategy for restructuring the industry, to make production more efficient and competitive. That is beginning to happen in the Caribbean, for example, with Jamaican bananas. We are also working closely with the local European Union aid office to ensure that European Union funds available for restructuring, such as STABEX, are used to maximum effect.
We have worked hard to secure an increase in Belize's annual quota, and the 15,000 tonnes allocated in January are a step forward. But we are also supporting amendments to the banana regulation currently under discussion in Brussels, which would bring additional benefits to Belize and other Commonwealth Caribbean producers.
If bananas fail and if there is not sufficient economic diversification, there is always the danger that we shall start to see an increase in the trafficking and production of illicit drugs, so we must ensure that we do all that we can to help promote an environment that allows the Caribbean to prosper through equitable trading arrangements with us and north America.

Ms Abbott: The Minister, I hope, will not need me to remind him that, for many of the Leeward Islands,


bananas represent the greater part of their foreign exchange and are important creators of work, which is so important in creating social stability. The Minister talked about restructuring, but at the end of the day bananas from the Caribbean cannot compete on a level playing field with bananas from south America, because the plantations will always be at an advantage compared with the small family allotments in the Caribbean. What are the social consequences for the Caribbean of the collapse of the banana industry and the failure of Her Majesty's Government to support it?

Mr. Baldry: The hon. Lady has been in and out of this Adjournment debate like a yo-yo. I would be prepared to listen to her advice on the Caribbean a little more closely if she was at least able to tell the difference between the Windward and the Leeward Islands.

Ms Abbott: Will the Minister give way?

Mr. Baldry: No.
We are also encouraging diversification in the Caribbean economies and are generous in our aid for that. I note that the new Prime Minister of Dominica, who was elected earlier this week, is a specialist in agriculture and, of course, we wish him and his new Government well. I take this opportunity to pay a public tribute to the achievements of his predecessor, Dame Eugenia Charles. The Commonwealth and Commonwealth meetings will be all the poorer for the loss of her presence.
One has to remember the dynamics of the situation that underlies the whole issue of bananas in the Caribbean. If access is reduced, farmers will go out of business, and the World bank has made some bleak forecasts in that respect. But the volume of bananas to be transported will also be reduced, and that will make their transport less economic, which will, in turn, increase the unit costs. Moreover, if fewer boats call, it will be more difficult to ship any alternative products, such as passion fruit, and the chances of a successful diversification strategy replacing the banana industry will be correspondingly reduced.
Those are the economic facts, and I do not think that anyone can be in any doubt as to why we support, and will continue to support, the EU banana regime and why we support, and will continue to support, Commonwealth Caribbean colleagues whose livelihoods are largely dependent on bananas. But they must recognise, as we recognise, that their banana industries have to become as efficient as possible.
We all recognise that we must maximise the potential for economic diversification in the region and, of course, there is much successful diversification in the Caribbean. One aspect of that is the growth of offshore banking and financial services, and the development of those services has made an enormous difference to the well-being of many people in the region. There are dangers that the opportunities provided by those services will be abused and will threaten them. We have paid special attention to that and a full-time expert is attached to our mission in Bridgetown, to advise on and improve the necessary safeguards.
All our Caribbean dependent territories now operate banking guidelines that are based on the Basle principles. We are discussing the introduction of legislation on regulatory co-operation and international businesses and

exempt companies. Our success in deterring shady dealing was amply demonstrated in recent months by the closure of the Guardian bank in the Cayman Islands and the anti-money-laundering operation that was mounted so effectively with the aid of the United States authorities and the diligence of the Governor in Anguilla. There is an increasing realisation that the key to building a sustainable and successful offshore financial industry is to have effective and transparent regulations.
There is always a suspicion that the financial regulations that every dependent Caribbean territory has to introduce are in some way tougher than those that are introduced by other such territories. That is not the case. We want to ensure that every dependent Caribbean territory has tough, proper financial regulations, so that there is only sound money in those islands and there is no suggestion of bad money coming to them. That must be in the interests of those territories and I am sure that they recognise that.
One of the reasons for the offshore financial industry suffering an unsatisfactory image in the past is that it can offer opportunities to drug dealers and other criminals to support their illegal operations. The cultivation of drugs in the Caribbean is not high despite the natural advantages of climate, but the area has become a significant conduit for the transport of drugs between the major sources of supply in south America and the major market for narcotics in north America and Europe. There have, for instance, been some very large seizures in the waters off the British Virgin Islands. We are providing considerable assistance to both independent and dependent territories in the region to combat that threat. The West Indies guard ship has played an important role in that connection, often co-operating with other Governments who have interests in the area such as the American, French and Dutch Governments.
At our suggestion, the United Nations international drugs control programme organisers will hold a workshop in the region later this year to agree further practical anti-narcotics measures.
There are many challenges ahead in the Caribbean, and probably the most important of them is to encourage good government. Without that, dependence on aid and drugs will be difficult to avoid. For example, it is better to have trade in bananas than unproductive aid that might be channelled into unsatisfactory activities such as drug trafficking or money laundering. The North American free trade area is a significant new factor in Caribbean trade. The key to the Caribbean's response will be the ability of all its diverse elements to overcome traditional differences. For that reason, we are watching with close interest the formation of the Association of Caribbean States.
We already give strong support to the Caribbean Community and Common Market, the Organisation of Eastern Caribbean States and the regional security system. In that context, we have maintained a British military advisory and training team based in Barbados. We also maintain a naval presence in the Caribbean and the guard ship has played an important role not only in relation to the defence of Belize but recently in connection with the Haiti crisis. In London, we continue our grant to the West India Committee and I hope to see the leading members of that committee again next week.
I hope that I have answered all the questions of my hon. Friend. If the hon. Member for Hackney, North and Stoke Newington wishes to ask a final question, I should be glad to try to answer it.

Ms Abbott: The Minister was dismissive of my remarks earlier, but I am anxious that Her Majesty's Government, in their policy formulation in relation to the Caribbean, take the interests and genuine concerns of people of Caribbean origin living here as seriously as the interests of business people. I re-emphasise that there is a genuine concern and wish that we be taken seriously when we speak out about our relatives and interests in the Caribbean, just as business men are taken seriously.

Mr. Baldry: I am amazed that the hon. Lady should feel it necessary to make such a point. Let me take just one example: the Caribbean dependent territory of

Anguilla. I have probably seen far more members of the Anguilla community resident in the United Kingdom than people with business interests in Anguilla. As I made clear earlier, in this country, a large population of Caribbean origin obviously take a close interest in what takes place in the Caribbean and we pay considerable respect and attention to their views, but anyone who has any knowledge of the Caribbean, and particularly of the Commonwealth Caribbean, will recognise that the UK is, has been and continues to be at the forefront of being a friend to those countries.
The Caribbean is an important region to us. We have many friends there. It will continue to be an important region to us and I am confident that, as we go into the 21st century, we shall continue to have many friends there.
Question put and agreed to.
Adjourned accordingly at six minutes past Eight o'clock.